Feds move to block AT&T-T-Mobile merger

The U.S. Justice Department Wednesday moved to block the proposed $ 39 billion merger between AT&T and T-Mobile.

In a civil suit in competition at the U.S. District Court District of Columbia today, the Justice Department argued that the proposed merger would harm competition in the wireless industry, especially since T-Mobile has historically offered low-cost wireless voice and data customers. The Justice Department also argued that any efficiency gained by combining AT&T and T-Mobile spectrum would not be enough to offset the damage done to U.S. consumers for further consolidation in the wireless industry.

Sprint holds government intervention in the merger

“Any way to see this transaction is anticompetitive,” said Sharis Pozen, an acting assistant attorney general, in a news conference. “Our action today aims to ensure that our country enjoys the competitive wireless industry deserves.”

The Justice Department said AT&T carefully examine the argument that consumers would benefit from the proposed merger, it would give AT&T a strong spectrum portfolio that could be used to build a 4G LTE network of high quality throughout United States. The Department of Justice rejected this argument by noting that AT&T already had significant unused spectrum holdings and said “AT&T could obtain substantially the same improvement in the net … if you simply invest in your own network without removing a nearest competitor. ”

To make matters worse for AT&T, the company had previously agreed to pay the owner of T-Mobile of Deutsche Telekom a cancellation fee $3 billion if the merger is not approved. According to a Bloomberg report, which would “also provide T-Mobile U.S., wireless spectrum in some regions and reduced charge for calls on the AT&T”.

M & A: fusion of technology and best bids for 2011

For its part, AT&T seems bent by the stick of the Justice Department and AT&T General Counsel Wayne Watts released a statement saying the company was “surprised and disappointed by today’s action,” while he promised “to request an expedited hearing for the enormous benefits of this merger may be subject to review.”

“The Department of Justice has the burden of proof alleged anti-competitive concerns and we intend to vigorously contest this matter in court,” said Watts. “At the end of the day, we believe that the facts guiding the final decision and the facts are clear.”

Julius Genachowski, chairman of the FCC, issued a statement that does not support or oppose directly to satisfy the Justice Department, but also recognized that the FCC had “serious concerns about the impact of the proposed transaction on competition.”

But even if the Justice Department is successful in its application, that does not mean the merger of AT & T, T-Mobile is completely dead. As a telecom analyst Jeff Kagan said today, the Justice Department’s suit probably just means that the merger is dead in its current form. Kagan believes that AT&T could redo part of its merger and still end the acquisition of T-Mobile.

“This agreement is not dead, but it will be different,” he says. “The question is what AT&T will have to give up.”

AT&T proposed merger with T-Mobile has been criticized by consumer groups, rival Sprint wireless service provider and analyst firms such as Yankee Group, who argue that the merger will lead to the emergence of a duopoly market Wireless telecommunications largely controlled by Verizon and AT & T. The merger were to pass regulatory review, would be the fourth major merger of mobile telephony in eight years, after AT & T-Cingular 2004, Sprint-Nextel in 2005, and Verizon, Alltel in 2008. AT & T would become by far the largest U.S. wireless operator with more than 130 million subscribers.