The price of AT&T's failed acquisition of T-Mobile will be bigger than the $6B breakup fee

Sue Marek
Nine months after announcing its proposed $39 billion acquisition of T-Mobile USA, AT&T (NYSE:T) yesterday pulled the plug on its effort to purchase the nation's No. 4 wireless operator.  

AT&T's decision came after the Department of Justice filed a lawsuit to block the deal on antitrust grounds and the FCC released a report that was highly critical of the deal's impact on consumers.  

AT&T certainly fought long and hard to keep the deal alive, despite the growing number of obstacles. Clearly, the company's decision to pull the plug on this acquisition will come with a big price-tag. And it will likely be greater than just the $6 billion breakup fee.

I suspect the repercussions to AT&T and T-Mobile will come in many forms. "This was not just a regular merger," said analyst Iain Gillott of iGR Research. "There will be a lot of repercussions for a lot of people."

One likely result is that we will see some management changes at AT&T and T-Mobile. High-profile executives who were front-and-center advocating for this acquisition will likely disappear from view and either be reassigned or their tenure may end rather abruptly. "It will not be business as usual afterwards," said Roger Entner, founder of Recon Analytics and a regular contributor to FierceWireless. "Someone will have to pay for it."

Another possible result is that we may see T-Mobile USA suddenly fill out its ranks with executives who can rebuild the company from its current weakened state. I expect T-Mobile's management is currently trying to figure out what it can do to reinvigorate sales and stop its postpaid subscriber base from fleeing.

Mark Lowenstein, founder of Mobile Ecosystem and a frequent FierceWireless contributor, believes that T-Mobile, with its newly found cash, will be able to shore up its HSPA+ network--but that may still not be enough for it to compete long-term in the U.S. market, where AT&T, Verizon Wireless (NYSE:VZ) and Sprint Nextel (NYSE:S) are committed to deploying LTE. "T-Mobile needs an LTE strategy and it needs sub-1 GHz spectrum," Lowenstein said.

Clearly the failure of such a high-profile and potentially game-changing acquisition will have a wide-ranging impact on AT&T, T-Mobile and the entire industry. For the past nine months, AT&T's proposed purchase of T-Mobile has played an instrumental role in prompting other spectrum acquisitions and wholesale deals. I can't wait to see the ramifications of this high-profile breakup. --Sue

Suggested Articles

Sprint announced the opening of a TIP Community Lab in Overland Park, Kansas, where it hopes to further the development of OpenRAN 5G NR solutions.

Vodafone plans to issue a request for quotes for open RAN technology for its entire European footprint of more than 100,000 sites.

AT&T's Igal Elbaz also talked about dynamic spectrum sharing and the economic challenge of 5G fixed wireless.