Casting thin-veiled aspersions the government’s way, AT&T threw in the towel last night, scuppering its plans to purchase T-Mobile USA from Deutsche Telekom. $39 billion dollars AT&T would’ve paid the German-based company will remain in its coffers after the government blocked the acquisition on grounds it would harm competition and lead to price increases for consumers.
For its part, Deutsche Telekom’s saying little in the collapse’s wake, making general albeit vague pronouncements about its plans to shore up its flagging U.S. telecom asset.
“In the long term, we need more spectrum and network capacity,” said Deutsche Telekom CEO Rene Obermann in a conference call (via Reuters). “We are working on that. But we will not speculate about any inorganic steps or deals.”
The problem for T-Mobile lies with its inability to snap up airwaves it claims are necessary to remain competitive, though AT&T will turn over $1 billion in spectrum to T-Mobile as part of the breakup process. Both AT&T and T-Mobile are in trouble at this point, each looking for ways to improve network speeds as efficiently as possible as video and music downloads by tablet and smartphone owners increase wireless congestion. What’s more, competitor Verizon Wireless just snatched the $4 billion in spectrum thought to be a fallback for AT&T if the T-Mobile deal didn’t happen.
For parent company Deutsche Telekom, analyst Jacques Abramowicz with Silvia Quandt sees the AT&T-T-Mobile deal’s failure relegating T-Mobile to another “subscriber-losing business as [Deutsche Telekom] confronts the fallout from Europe’s debt crisis.”
At least one possible way forward for T-Mobile USA would be a merger with Sprint, but that, too, could face intense governmental scrutiny and opposition.
In the short run, T-Mobile USA gets more spectrum in Boston, Dallas and Los Angeles, as well as $3 billion in cash–all off the deal’s breakup–but in the long run its prospects are less than promising.