U.S. Justice Department Attempting To Block AT&T and T-Mobile Merger

Posted Aug 31, 2011

The U.S. Justice Department has filed a lawsuit to block AT&T Inc. (NYSE:T) to merge with T-Mobile. AT&T proposed a $39 billion acquisition of T-Mobile USA. The Justice Department believes that the acquisition of T-Mobile would “substantially lessen competition.” The complaint was filed in a federal court in Washington. ?AT&T?s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market,? stated the U.S. in a filing.

If regulators prevent the deal from happening, AT&T would have to pay T-Mobile parent company Deutsche Telekom $3 billion in cash. AT&T would also have to provide T-Mobile with wireless spectrum in certain regions and reduce charges for calls into AT&T’s network. This total package is worth as high as $7 billion.

AT&T’s acquisition of T-Mobile would be a combination of the second and the fourth largest wireless carriers. The combined company would beat Verizon Wireless in terms of subscriber numbers. Sprint would be heavily setback from the acquisition. The lawsuit is under U.S. v. AT&T Inc., 11-01560, U.S. District Court for the District of Columbia (Washington).