AT&T Drops Bid for T-Mobile, Criticizes Government for Opposition

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Danny Moloshok / REUTERS

So that’s it then: AT&T says it’s officially putting its protracted and recently all but dead attempt to snatch up T-Mobile USA out to pasture. Make that $39 billion dollars German-based parent company Deutsche Telekom won’t see, after the government worked to thwart the deal, suing to block it in late August, calling it anticompetitive and warning it could raise consumer prices.

(MORE: AT&T Vows to Pursue T-Mobile Acquisition, Immediately Hints Otherwise)

On Sunday, reports circulated that AT&T and T-Mobile were unable to find buyers for assets that might have helped the merger win approval. It sounds like those reports were spot on.

While the deal is dead–no ifs, ands, or buts–AT&T used the occasion to go not-so-gently into that good night, claiming the industry needs more space airwave-wise to grow, and implying that its capitulation in the face of staunch government opposition only underlines that fact.

“The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry,” wrote AT&T in a statement. “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.”

The company said it would “continue to be aggressive in leading the mobile Internet revolution,” adding that it had invested more over the past four years in its networks “than any other U.S. company.”

“The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces,” said Randall Stephenson, AT&T chairman and CEO.

Had AT&T managed to overcome government opposition and the deal gone through, the company would have become the largest cellphone outfit in the U.S.–a step up from second place for AT&T and four steps up for T-Mobile.

AT&T says it’ll take a $4 billion charge in the fourth quarter of 2011 off the breakup, but that it will enter “a mutually beneficial roaming agreement with Deutsche Telekom.”

MORE: AT&T Buyout or Not, Dish Wants to Replace T-Mobile as America’s 4th Favorite Wireless Company

Matt Peckham is a reporter at TIME. Find him on Twitter at @mattpeckham, Google+ or Facebook. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

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