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AT&T Wireless Drops T-Mobile Takeover Bid, Forms Partnership Instead

AT&T announced on Monday that they are ending their $39 billion bid to acquire T-Mobile USA from Deutsche Telekom after fierce government opposition marred the deal.

Speaking about their decision officials at AT&T say the actions of the U.S. government to block the deal will not change the challenges currently being faced by the telecommunications industry, specifically the company’s need to acquire more airwaves for expansion purposes.

Had the deal been allowed to pass AT&T would have become the largest cellular company in the United States, surpassing CDMA provider Verizon Wireless. As it stands AT&T is currently the second largest provider with T-Mobile just behind Sprint Wireless in the fourth place position.

On Aug. 31 the Justice Department sued to block the merger, claiming that such a deal would reduce competition while raising prices for consumers.

After the lawsuit was filed both companies withdrew their Federal Communications Commission (FCC) application when it became known that the chairman of the FCC opposed the merger.

Instead AT&T Wireless officials say they will pay T-Mobile USA their initially promised $4 billion breakup fee and will enter into a “mutually beneficial” roaming deal with T-Mobile, a deal that will allow the company’s to share their network capacities without an acquisition.

Do you think T-Mobile and AT&T Wireless should have been allowed to merge or would such a partnership have choked off competition throughout the U.S. cellular market?

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