Thread: U.S. Moves to Block Merger Between AT&T and T-Mobile

The last time I tried to use a payphone was at the rest stop in northern Delaware along I-95 about 4 years ago. For the call I wanted to make, which was local to the area, the phone asked for nearly $4 to be fed into the change slot. I didn't have that much change even if I thought it was worth it.

http://www.nytimes.com/2011/09/06/bu...ines&emc=tha26

T-Mobile USA Owner to Study Deal Options
By BLOOMBERG NEWS

Deutsche Telekom said on Monday that it would evaluate options for T-Mobile USA to help support a $39 billion sale of the business to AT&T, a deal that is being contested by the Justice Department.
“There’s no point in lamenting,” Deutsche Telekom’s chief executive, René Obermann, said on Monday. “We’ve got the authority’s complaint and now we have to deal with it.”
A Deutsche Telekom spokesman, Philipp Kornstaedt, said in an interview by phone on Monday that, “if there are conditions to be attached to the transaction, we will work on the matter together with AT&T.”
The proposed takeover, which the Justice Department sued to block on Wednesday, is the largest announced acquisition this year, according to data compiled by Bloomberg. It is also the biggest move by Mr. Obermann in his almost five years as Deutsche Telekom’s chief.
“I’m sure they’ll be proactively entering into discussions with regulators on a region-by-region basis,” said Mark James, an analyst for Liberum Capital in London. “If you’re a Deutsche Telekom investor, you’re going in the face of regulatory uncertainty.”
Deutsche Telekom will continue to record T-Mobile USA, which accounted for 24 percent of net revenue in the second quarter, as a “discontinued” operation in its financial reports, Mr. Kornstaedt said. Its net income dropped 55 percent in the first six months of 2011 as its base of subscribers declined by 663,000, or 2.5 percent.
The purchase of T-Mobile USA would combine the second- and fourth-largest carriers in the United States, dethroning Verizon Wireless as the market leader. The combined company would dwarf the No. 3 carrier, Sprint Nextel, which has argued against the deal.
Shares of Deutsche Telekom fell 4.6 percent, to close at 8.33 euros ($11.74) in Frankfurt on Monday. The shares have declined 13 percent since the Justice Department filed its lawsuit. Shares of AT&T slipped 0.8 percent, to close at $28.05 on Friday. United States markets were closed on Monday for Labor Day.

Originally Posted by LAM

when there is no more competition capitalism ceases to exist.

A false dilemma.

The Ayn Rand Center for Individual Rights: The ARC Speaker Series--The Monopoly Myth: The Case of Standard Oil

Originally Posted by troubador

A false dilemma.

The Ayn Rand Center for Individual Rights: The ARC Speaker Series--The Monopoly Myth: The Case of Standard Oil

not a myth at all. i've been working in telecom for 20 years I've experienced the changes first hand. i'm on the phone with guys on the long haul side from at&t just about daily.

and Ayn Rand is a fraud she had no problem taking benefits from the government when she needed it, just like paul ryan.

a monopoly is easier to accomplish when there are few components in that specific commodity.

Originally Posted by LAM

not a myth at all. i've been working in telecom for 20 years I've experienced the changes first hand. i'm on the phone with guys on the long haul side from at&t just about daily.

and Ayn Rand is a fraud she had no problem taking benefits from the government when she needed it, just like paul ryan.

ad hominem

the monopoly is much easier to establish when it comes to infrastructure as there are less components like in telecommunications. there is only one long haul backbone network in the US that runs from coast to coast. from there the various network elements are distributed from the rboc's to the clecs/ilecs which provide service to geographical areas by area code inside each state.

much harder to accomplish in other industry's like auto. there are just far too many components when it come to building and distributing a car. it would be impossible to ever establish a monopoly there.

it's why the have a time limit on patents in the pharmaceutical industry, etc.

AT&T braces for T-Mobile deal collapse

AT&T braces for T-Mobile deal collapse - Business - msnbc.com

Originally Posted by jkhnwspec

AT&T braces for T-Mobile deal collapse

AT&T braces for T-Mobile deal collapse - Business - msnbc.com

See that's where I'm confused. So big daddy DT and AT&T are pushing for the merger, but the government is fighting it?

Originally Posted by djlance

See that's where I'm confused. So big daddy DT and AT&T are pushing for the merger, but the government is fighting it?

yes, and this is a good thing...

AT&T is one of the most profitable company's in the US and the world, they have the monies to invest in their network. "merging" with T-Mobile would be easier, and less expensive at the conclusion they would have less competition in the wireless market and have a good 70% market share with Verizon at 30%.

government needs to butt out

Originally Posted by LAM

yes, and this is a good thing...

AT&T is one of the most profitable company's in the US and the world, they have the monies to invest in their network. "merging" with T-Mobile would be easier, and less expensive at the conclusion they would have less competition in the wireless market and have a good 70% market share with Verizon at 30%.

I agree with you

AT&T Ends $39 Billion Bid for T-Mobile - NYTimes.com

December 19, 2011, 4:44 pm AT&T Ends $39 Billion Bid for T-Mobile

By MICHAEL J. DE LA MERCEDStephen Yang/Bloomberg NewsT-Mobile, the weakest of the four national operators, is now left with an uncertain future.
AT&T on Monday ended its effort to buy T-Mobile USA, acknowledging that it could not overcome stiff opposition by the Obama administration to form the nation’s biggest cellphone service provider.
The decision to scrap the $39 billion takeover — which would have been the biggest deal of the year — is a major setback for AT&T, which had pinned its hopes for growth on the acquisition. The company wanted T-Mobile’s cellular airwaves, or spectrum, to relieve its congested network and offer faster service for data-hungry devices like the iPhone.

And the deal’s end leaves T-Mobile, the weakest of the four national operators, with an uncertain future.
For the Obama administration, the collapse of the deal is confirmation that it has reinvigorated antitrust oversight that it said had become weak under its predecessor. The Justice Department took the aggressive step of suing to block the deal in late August, while the Federal Communications Commission had signaled its intent to fight the merger as well.
“People in this town didn’t think that the department was willing to take the risk to litigate big, complex cases,” said a senior Justice Department official, who spoke on the condition of anonymity because employees were not authorized to go beyond the department’s public statement. “But this puts down a very firm marker that we are taking antitrust enforcement very seriously.”
The company had sought to offer concessions to win regulatory approval, including potentially selling more than a quarter of T-Mobile’s customers and spectrum to a competitor like Leap Wireless.
Other ideas included possible network-sharing agreements, though those were less fully developed.
After the F.C.C. declared its opposition to the deal, AT&T withdrew its application for approval from the agency on Thanksgiving. Last week, AT&T asked for a delay in the Justice Department lawsuit as it weighed its options.
By this last weekend, AT&T had concluded that no change to its bid would have been enough to pass muster, according to people briefed on the matter.
A merger of the two companies, consumer advocates had said, would have created a duopoly of AT&T and Verizon Wireless with almost three-quarters of the market between them.
“Consumers won today,” Sharis A. Pozen, the Justice Department’s acting assistant attorney general for antitrust, said in a statement. “Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation.”
AT&T will pay Deutsche Telekom $4 billion in cash and wireless spectrum access as a break-up fee under the terms of the merger announced in March. After taxes, however, the financial hit to AT&T will be only about $1.5 billion, or roughly two months’ worth of cash flow. The two companies will now begin a seven-year roaming agreement that will expand T-Mobile’s national coverage.
That agreement, however, does not solve AT&T’s network constraints. Nor does it shore up T-Mobile’s diminishing competitive position. Deutsche Telekom has indicated that it would like to dispose of T-Mobile eventually, having failed to develop it into a stronger competitor to AT&T, Verizon Wireless and Sprint Nextel.
The push for a merger was spearheaded by Randall L. Stephenson, AT&T’s chairman and chief executive, in his first bold strategic step since taking the reins in 2007.
To support the deal, AT&T lined up an assortment of lawmakers, corporate customers and local partners to promote the benefits of the merger.
But that campaign held little sway over government regulators, who were skeptical of arguments that uniting two of the nation’s biggest wireless companies would not harm competition. The Justice Department joined with several state attorneys general in its antitrust lawsuit and hired prominent outside counsel. And the F.C.C. published its staff’s 157-page internal report laying out its concerns about the deal.
AT&T had prepared for battle with the government, adopting at times an openly hostile stance toward the F.C.C. And few people thought the Justice Department would be able to fend off AT&T, whose Washington lobbying operation is legendary.
Still, the companies said from the beginning that they were willing to consider conditions that might be required to allow the deal to proceed. And the Justice Department had taken criticism for approving other big deals, including Comcast’s takeover of NBCUniversal.
In the case of AT&T, Justice Department officials repeatedly signaled that they would oppose the deal, and finally sued the company in late summer.
On Monday, AT&T said it would continue to invest in expanding its network. But Mr. Stephenson warned lawmakers that they must take action to increase the availability of wireless spectrum to help expand faster cellular data coverage.
“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,” he said.
Analysts said that Deutsche Telekom must weigh the future of T-Mobile, including a potential sale of assets or an initial public offering.
One potential partner is Dish Network, the satellite TV provider. Its chief executive, Joseph Clayton , told Bloomberg News last week that his company was willing to pool its wireless holdings with T-Mobile’s to create a stronger competitor to AT&T and Verizon.
“T-Mobile is probably going to be profoundly damaged by this,” Tero Kuittinen, an independent research analyst, said. “They should have done some strategic rethinking instead of chasing this mirage, this dream of a merger. Now they’ve lost a lot of time.”
Edward Wyatt and Brian X. Chen contributed reporting.

Sounds like a setup. Like AT&T didn't want it to go through so that T-Mobile would start falling hard and then they could come back and take it from behind at a steal.

Just what I get from the whole thing....