Antitrust suit set to scupper AT&T's $39bn T-Mobile deal
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Thursday 01 September 2011
US competition authorities moved last night to block a merger of two of the four largest mobile-phone operators in the country, saying the deal could raise prices and reduce services.
The Obama administration sued to scupper the $39bn (£24bn) acquisition of T-Mobile USA from Deutsche Telekom by AT&T, announced in March, sending shares in both AT&T and Deutsche Telekom down by about 5 per cent.
"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," said Deputy Attorney General James Cole.
The lawsuit, which AT&T said it would defend vigorously in court, signals the tough attitude of the Obama administration on competition issues, in contrast to the previous Bush administration. Earlier this year, the Department of Justice also said it would block a takeover of the New York Stock Exchange by rival Nasdaq.
The cash and stock acquisition of T-Mobile USA would leapfrog AT&T into the top spot in terms of US subscribers, with more than 160 million customers, one-third more than the current No1, Verizon Wireless, which is 50 per cent owned by Vodafone of the UK.
Under the terms of the deal, Deutsche Telekom would receive up to $29.2bn in cash, with the rest in AT&T stock, leaving the German giant with a stake of between 5 per cent and 8 per cent of the US company. In the event of the deal falling apart for regulatory reasons, the two sides agreed in March, AT&T would pay a break-up fee of $3bn and sign a roaming and spectrum-rights agreement worth potentially another $6bn to Deutsche Telekom.
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