AT&T Is Giving Up on Buying T-Mobile

Can you hear me now? Photo: Cathleen Abers-Kimball/copyright? 2008, Cathleen Abers-Kimball

The planned merger between AT&T and T-Mobile is no more after government concerns about market competition derailed the agreement. AT&T dropped its acquisition bid today in the face of a lawsuit from the Justice Department that claimed combining the two mobile carriers would "would remove a significant competitive force from the market" and therefore violate anti-trust law. To salvage the $39 billion deal, AT&T considered selling off pieces of the T-Mobile network to smaller providers, but as The Wall Street Journal reported today, those negotiations were going nowhere. AT&T has had enough of trying.

An anti-trust trial was set to start in February, but is now unnecessary.  AT&T said in a frustrated press release that it cannot please both the Justice Department and the Federal Communications Commission, and warned that customers "will be harmed and needed investment will be stifled" because of the regulations. AT&T now owes at least a $3 billion breakup fee to T-Mobile's parent company, Deutsche Telekom.