AT&T Pulls Out of Acquisition Deal | KERA News

AT&T Pulls Out of Acquisition Deal

Dec 19, 2011

Dallas-based telecom giant AT&T has pulled the plug on its $39 billion acquisition of T-Mobile USA, the company said Monday.  

If approved, this deal would have made number two wireless provider AT&T the nation's biggest. But months ago, it seemed questionable when the Department of Justice - the DOJ - sued AT&T over the merger with T-Mobile. It argued the deal would hurt competition and customers. More recently, the Federal Communications Commission failed to back it.

At risk the whole time was $4 billion dollars AT&T agreed to pay T-Mobile's owner if the deal fell through. Now, says analyst Suhail Chandy, with Wedbush Securities, AT&T must not only pay up, but still needs bandwidth this deal was designed to secure. Bandwidth helps speed service.

Chandy: They'll likely pursue smaller-sized acquisitions. Something that won't come with in the cross hairs of DOJ.

Chandy says customer service should not be affected by the $4 billion pay out, because he says AT&T is resilient. And while the company will need extra bandwidth eventually, the need is not urgent.