AT&T cancels plans to buy T-Mobile

It ends its quest after strong government resistance, will pay T-Mobile a $4 billion breakup fee, and sets a roaming arrangement instead

AT&T today ended its battle to buy T-Mobile USA, the No. 4 U.S. carrier from parent company Deutsche Telekom. In doing so, it will pay T-Mobile a $4 billion breakup fee. Earlier this fall, both the Federal Communications Commission and the U.S. Department of Justice said they would fight the sale, with the FCC saying it was not in consumers' interest. Had the deal gone through, AT&T would have become the No. 1 U.S. cellular carrier, leaping ahead of Verizon Wireless, which it trails slightly in terms of customers.

AT&T did agree to a roaming agreement with T-Mobile as a consolation prize. The company says that will alleviate some spectrum crunch, which was the main reason the company had argued for buying T-Mobile. But in a statement, AT&T said the roaming agreement would not solve its spectrum needs.

However, critics argued that the $39 billion buyout would have done little to alleviate spectrum shortages, especially as carriers are sitting on unused spectrum in some regions, and would have forced prices up by removing one of the five main cellular carriers from the market, especially as AT&T and Verizon Wireless account for about 85 percent of the market together. The other major carriers are Sprint PCS, T-Mobile, and Metro PCS, in that order of market share.

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