AT&T, T-Mobile Merger on Hold

Department of Justice sues AT&T to stop $39 billion merger with T-Mobile

Need to read anything more after the headlines?

The US Department of Justice has sued AT&T (additional info here) for its proposed merger with T-Mobile for violating anti-trust legislation.

AT&T said that acquiring T-Mobile would lower costs for consumers. AT&T also said that the merger would help them offer 4G service to the entire United States.

The Department of Justice doesn't buy it:

The Department filed its lawsuit because we believe the combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for their mobile wireless services.

Source

AT&T said it was disappointed by the decision (naturally) and restated the benefits of the merger:

This merger will:

  • Help solve our nation’s spectrum exhaust situation and improve wireless service for millions.
  • Allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population;
  • Result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.

Source

AT&T doesn't deny that it would reduce competition with the merger (it would). It just argues that the costs outweigh the benefits.

I don't think AT&T's argument will stand up in court.

AT&T is not being sued because it has a good idea and wants to improve itself; AT&T is being sued because it wants to acquire a competitor that will reduce competition.

The merger will consolidate AT&T's hold on the mobile marketplace; AT&T will have accounts for around 130 million subscribers, which is about 43% of the United State's population (AT&T has 98 million subscribers, T-Mobile around 34 million). Their only major competitors will be Sprint (51 million subscribers) and Verizon (95 million subscribers).