AT&T opts out of T-Mobile merger

Mitchell Hartman Dec 20, 2011

Jeremy Hobson: AT&T is dropping its proposal to buy rival T-Mobile, in what would have been a $39 billion deal. The government was opposed to the deal because of anti-trust concerns.

Marketplace’s Mitchell Hartman joins us now live to explain who wins and who loses in this situation. Good morning, Mitchell.

Mitchell Hartman: Hi Jeremy.

Hobson: First of all, let’s talk about the big (perhaps) loser here. How much of a blow is this to AT&T?

Hartman: Jeremy, it’s definitely not good news for them. AT&T has a few headaches to deal with. It’s battling with Verizon for dominance in the American market. It has to expand and improve its network — consumers complain about dropped calls and slow download speeds on their smartphones, especially in places where everyone seems to have a smartphone, like New York and San Francisco. So merging with T-Mobile, which is the country’s fourth-biggest carrier, would have given AT&T instant access to all those T-Mobile cell towers and broadband capacity.

Republican Senator Michael Lee put it in pretty rosy terms during hearings earlier this year.

Michael Lee: A merger between the two companies may provide significant and immediate efficiencies, that will enable enhanced service quality, fewer blocked or dropped calls, and increased data speeds.

The problem is that the Justice Department didn’t think that it would do that — it charged the merger would actually leave consumers with less choice and higher prices. AT&T faced an uphill battle and backed out.

Hobson: So consumers may be winners here — who else?

Hartman: Well remember Sprint? It’s the one that’s not AT&T or Verizon. It now doesn’t have to face super-giant AT&T. And there’s also a loser: Wall Street bankers. The merger doesn’t go through, they don’t pocket about $150 million in fees.

Hobson: Poor Wall Street bankers. Marketplace’s Mitchell Hartman, thanks a lot.

Hartman: You’re welcome.

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