AT&T Wireless suddenly announced on Monday that it had given up its plan to buy rival T-Mobile and become the largest wireless carrier in the United States. As a result, AT&T will pay T-Mobile owner Deutsche Telekom a previously promised $4 billion breakup fee.
"The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the US wireless industry," an AT&T statement reads. "It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled."
AT&T offered $39 billion to purchase T-Mobile in March, pledging to combine the company's two networks and create the largest US wireless network. Competitors and consumer advocacy groups were quick to condemn the deal, however, complaining that it would harm consumer choice and raise prices. Antitrust regulators agreed, and both the FCC and US Department of Justice (DOJ) separately moved to block the deal in the intervening months. AT&T tried to sell off various assets to appease the concerns of the agencies but eventually gave up the effort.
As part of its announcement Monday, AT&T also said it would enter "a mutually beneficial roaming agreement with Deutsche Telekom," though it's not clear whether that covers only the United States or Deutsche Telekom's international wireless networks as well.