AT&T accepts failure to land T-Mobile USA

AT&T has finally accepted that the obstacles to its takeover of T-Mobile USA are proving insurmountable, and has formally dropped the takeover bid.

Due to the collapse of the takeover bid, AT&T will recognise a pre-tax accounting charge of US$4 billion in the fourth quarter of 2011. Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom.

"To meet the needs of our customers, we will continue to invest," said Randall Stephenson, AT&T chairman and CEO. "However, adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the US wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC. Second, policymakers should enact legislation to meet our nation’s longer-term spectrum needs."

The takeover bid was originally announced in March 2011, and was for a US$39 billion takeover of T-Mobile by AT&T. Under the terms of the deal, Deutsche Telekom was due to receive US$25 billion in cash and US$14 billion in AT&T shares.

Deutsche Telekom had planned to use approximately US$18.4 billion of the proceeds to reduce its debts. Although Deutsche Telekom is no longer receiving the cash from the sale, and will have to reconsolidate T-Mobile USA into its accounts, it is receiving cash and services worth around US$6 billion in compensation.