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AT&T Gives Up On T-Mobile Deal While Losing $4 Billion

Sites include , . Published on December 28th, 2011. Written by Anthony West.

In the world of big-money acquisitions and telecoms giants, a failed attempt at a buy-out can be costly. This is what telecoms giant AT&T found out after it had to back out on a proposed purchase of European controlled telecoms company T-Mobile.

AT&T announced its intentions to call off the purchase in an official statement, making it very clear that it had considered all its options before making the decision. Had the sale go through, the owner of T-Mobile, Duetsche Telekom, would have been $39 billion richer. According to AT&T, several factors contributed to the abandonment of the deal, but the biggest was a hostile and antagonistic government regulators. AT&T came under intense pressure from government regulators and a wary public who felt that the acquisition would give AT&T too much market share and stifle competition.

Calling off the deal wasn’t easy for AT&T, or cheap. The company had to pay T-Mobile a whopping $4 billion. This was the amount agreed upon by both parties in the event that the deal didn’t go through and for AT&T all I can say is: “Ouch!”

But AT&T isn’t moving away from T-Mobile entirely. As part of the “parting of ways”, AT&T and T-Mobile have agreed a mutually beneficial agreement. This will see AT&T still having presence, while building on other assets in other areas.

Do you think AT&T got a bad deal? Share your thoughts below.

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