Randall Stephenson, AT&T: Bid To acquire T-Mobile USA is Off Table - $4B Q4 2011 Charge

December 20, 2011

After a thorough review of options it has agreed with Deutsche Telekom AG to end its bid to acquire T-Mobile USA, which began in March of this year.

The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled.

“AT&T will continue to be aggressive in leading the mobile Internet revolution,” said Randall Stephenson, AT&T chairman and CEO. “Over the past four years we have invested more in our networks than any other U.S. company. As a result, today we deliver best-in-class mobile broadband speeds – connecting smartphones, tablets and emerging devices at a record pace – and we are well under way with our nationwide 4G LTE deployment.

“To meet the needs of our customers, we will continue to invest,” Stephenson said. “However, adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC. Second, policymakers should enact legislation to meet our nation’s longer-term spectrum needs.

“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,” Stephenson said.

To reflect the break-up considerations due Deutsche Telekom, AT&T will recognize a pretax accounting charge of $4 billion in the 4th quarter of 2011. Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom.

Deputy Attorney General James M. Cole and Acting Assistant Attorney General for the Antitrust Division Sharis A. Pozen issued the following statements today after AT&T abandoned its proposed acquisition of T-Mobile USA from its parent company, Deutsche Telekom AG:

Deputy Attorney General Cole:

“This result is a victory for the millions of Americans who use mobile wireless telecommunications services. A significant competitor remains in the marketplace and consumers will benefit from a quick resolution of this matter without the unnecessary expense of taxpayer money and government resources.”

Acting Assistant Attorney General Pozen:

“Consumers won today. Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation. We sued to protect consumers who rely on competition in this important industry. With the parties’ abandonment, we achieved that result.”

On Aug. 31, 2011, the department filed a lawsuit in U.S. District Court for the District of Columbia, to block the transaction, which would have combined two of the only four wireless carriers with nationwide networks. State attorneys general from California, Illinois, Massachusetts, New York, Ohio, Pennsylvania, Puerto Rico and Washington joined the United States as co-plaintiffs. The department coordinated its review of the proposed transaction with the Federal Communications Commission.