Ahh, sweet relief. That’s the feeling many had all over when they learned today that AT&T and T-Mobile have officially called off their engagement. For those not in the know, the “Death Star” AT&T was poised to become the number one wireless provider in the USA by gobbling up the smaller T-Mobile from Deutsche Telekom for the cool price of $39 billion—a rather sparkly engagement ring, indeed.
However, the controversial deal was met with critical debate. Besides outcry from consumers everywhere, particularly current T-Mobile users, AT&T faced strong opposition from both the Federal Communications Commission (FCC) and the U.S. Department of Justice. While AT&T strutted about and claimed the merger would benefit its customers and reduce prices, it was quite evident that removing competition and bumping AT&T to gargantuan proportions would only hamper consumers. There’s already pains from having only a handful of players to choose from in the game (none of which are really that good to begin with), making the merger a painful scenario at best.
Besides consumers nationwide, T-Mobile also has a reason to celebrate: the attempted deal with AT&T also carried a break-up penalty. Because the acquisition failed, T-Mobile is awarded $3 billion, roaming/spectrum agreements with AT&T (valued around $1 billion), and additional mobile licenses. Throw in the blessing of freedom from assimilation, and that’s quite the consolation prize!
However, it’s not all that rosy for T-Mobile owner Deutsche Telekom. According to Reuters, Deutsche Telekom was hoping to exit the U.S. market to focus on its European operations. The nearly $40 billion would have gone to playing down debt, launch a $6.51 share buyback program, and stepping up European investments.
Too bad for Deutsche Telekom, but it’s still a firm victory for American cellular customers. While it remains to be seen how well T-Mobile will do in the years to come, many are certainly delighted that AT&T was blocked. As they say in weddings, “If there is anyone who knows of any reason why these two may not be lawfully wed, let them speak now or forever hold their peace.”
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