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AT&T pull s $ 39 b ill i o n T -M obile b id

By Scott Moritz

Bloomberg News

Published: December 19, 201 1 8:00 pm

Updated: Dec. 19, 2011 9:43 p.m.

AT& T I n c. a b an do n ed a $ 39 b illi o n t a ke o ve r b id f o r T -M obile U SA a er u n dere stim atin g o ppo sit io n f r o m r e g u la to rs , t h w artin g

it s a m bit io n s t o b eco m e t h e b ig gest U .S . w ir e le ss c arrie r.

A T& T w ill t a ke a p re ta x c h arg e o f $ 4 b illi o n t o r e fl ect c ash p aym en ts a n d o th er c o n sid era tio n s d u e t o T -M obile -o w ner D eu ts c h e

Te le ko m A G , t h e D alla s-b ase d c o m pan y s a id i n a s ta te m en t M on day.

A T& T f a ile d t o c o n vin ce t h e J u stic e D ep artm en t, w hic h s u ed t o b lo ck t h e t ra n sa c tio n i n A ugu st, t h at i t c o u ld r e m ed y t h e m ark e t

im pac t o f a b so rb in g T -M obile . A T& T w ou ld h ave s p en t m on th s i n l i t ig atio n t o t r y t o w in c o u rt a p pro va l f o r b u yin g t h e n atio n 's

N o. 4 m obile -p h on e o pera to r i n t h e l a rg est m erg er a n d a cq u is it io n a n nou n ce d t h is y e ar g lo bally . T h e c o m pan y a ls o f a ce d

p o ssib le o ppo sit io n f r o m t h e F e d era l C om mun ic atio n s C om mis sio n .

"T h ey r o lle d t h e d ic e a n d t o ok t h eir c h an ce s," s a id C ra ig M off ett, a S an fo rd C . B ern ste in & C o. a n aly st i n N ew Y o rk . " In t h e e n d, i t

d id n 't w ork o u t, b u t t h at d o esn 't m ean i t w as a m is ta ke t o t r y ."

A T& T's d ecis io n c am e a er t h e j u dge i n t h e J u stic e D ep artm en t l a w su it a g re ed o n D ec. 1 2 t o p u t t h e c ase o n h old a s t h e

te le p h on e c o m pan y d ecid ed w heth er o r h ow t o r e vis e t h e t ra n sa c tio n . T h e d ela y m ay h ave m ad e i t m ore d iffi cu lt f o r A T& T t o

c lo se t h e d eal b y t h e S ep t. 2 0 d ead li n e.

AT& T C hie f E xe cu tiv e O ffi ce r R an dall S te p h en so n s a id i n M arc h , w hen t h e d eal w as a n nou n ce d , t h at h e w as c o n fid en t o f

re ce iv in g r e g u la to ry c le ara n ce . H e s a id t h e c o m bin atio n w ou ld h elp i m pro ve s e rv ic e , s p eed u p i n ve stm en t i n f a ste r n etw ork s

an d d riv e w ir e le ss e xp an sio n i n r u ra l a re as. T h e d eal w ou ld h ave a d ded T -M obile 's 3 3.7 m illi o n c u sto m ers t o A T& T's 1 00.7

m illi o n s u bsc rib ers , s u rp assin g V e riz o n W ir e le ss's 1 07.7 m illi o n .

C rit ic s o f t h e d eal s a id i t w ou ld e li m in ate a n a g gre ssiv e p ric e c o m petit o r, d riv in g u p s u bsc rip tio n c o sts . T -M obile 's w ir e le ss p la n s

are $ 15 t o $ 50 c h eap er t h an c o m para b le A T& T p la n s, a cco rd in g t o a n a n aly sis b y C on su m er R ep o rts .

F o r D eu ts c h e T e le ko m , t h e c o lla p se o f t h e d eal l e ave s i t w it h o n e m ore s u bsc rib er-lo sin g b u sin ess a s t h e B on n-b ase d c o m pan y

co n fr o n ts t h e f a llo u t f r o m E u ro pe's d eb t c ris is . D eu ts c h e T e le ko m h ad p la n ned t o u se t h e p ro ce ed s t o c u t d eb t b y 1 3 b illi o n

eu ro s ( $ 16.9 b illi o n ) a n d r e p u rc h ase 5 b illi o n e u ro s o f i t s s h are s. T h e c o m pan y a ls o n eed s f u n ds t o u pgra d e fi b er a n d w ir e le ss

n etw ork s i n G erm an y a n d o th er E u ro pean m ark e ts .

A T& T a n d D eu ts c h e T e le ko m p u lle d t h eir a p pli c atio n s t o t h e F C C o n N ov. 2 4, w it h A T& T a n nou n cin g t h e s a m e d ay t h at i t w ou ld

r e co rd $ 4 b illi o n i n c o sts t h is q u arte r t o r e fl ect t h e r is k o f t h e d eal c o ll a p sin g.

Th e w it h dra w al c am e a er F C C C hair m an J u li u s G en ac h ow sk i a sk e d t h e c o m mis sio n o n N ov. 2 2 t o s e n d t h e p ro po sa l t o a n

ag en cy j u dge f o r a h earin g. T h e s a m e m ove b y t h e F C C i n 2 002 h elp ed b lo ck E ch oSta r C om mun ic atio n s C orp .'s a cq u is it io n o f

sa te lli t e -T V r iv a l D ir e cT V.

A cco rd in g t o t h e t e rm s o f t h e o ff er, A T& T m ust p ay D eu ts c h e T e le ko m a $ 3 b ill i o n b re ak u p f e e i n c ash , t ra n sfe r r a d io s p ectru m

to T -M obile a n d s trik e a m ore f a vo ra b le n etw ork -s h arin g a g re em en t. D eu ts c h e T e le ko m h as v a lu ed t h e b re ak u p p ac k ag e a t a s

m uch a s $ 7 b illi o n .

In a n e ff ort t o s e ll t h e d eal t o r e g u la to rs a n d t h e p u bli c , A T& T v o w ed t o h on or t h e T -M obile s e rv ic e p la n p ric e s a  er t h e m erg er.

T h e c o m pan y a ls o v o w ed t o b rin g 5 ,0 00 c all- c e n te r j o bs c u rre n tly b ase d o ve rs e as t o t h e U .S . i n t h e e ve n t o f a p pro va l.