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AT&T, T-Mobile deal dead, Sprint among the winners

With AT&T ending T-Mobile bid, Sprint said to be a winner, while T-Mobile expected to start shopping for a new partner.

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AT&T yesterday ended its $39 billion bid to purchase smaller-competitor T-Mobile from Deutsche Telekom, writing in a statement that actions by the Federal Communications Commission and the Department of Justice to block the deal will ultimately result in harm to customers and stifled investment (CP: It's over: AT&T ends T-Mobile bid).

AT&T, unable to procure the much-needed additional spectrum the deal would have given it, said it has instead entered a "mutually beneficial roaming agreement with Deutsche Telekom."

"The mountain just looked too high," Endpoint Technologies analyst Roger Kay told Connected Planet of the announcement. "Now, it looks like T-Mobile will try to shop itself more creatively. For AT&T, it's a huge retrenchment."

T-Mobile and its customers arguably also lose out. Deutsche Telekom has said it's not interested in investing more in T-Mobile, which without AT&T won't see an upgrade to LTE anytime soon.

"Eventually T-Mobile will be sold to another operator(s), most likely a regional operator. However, not that many companies out there have an extra $39 billion available to buy a mobile carrier, so the number of potential buyers is fairly limited," analyst Ken Hyers, with Technology Business Research, said in an email. "This means that T-Mobile may continue to limp along for some time, steadily loosing value as its network infrastructure ages and higher-value postpaid customers migrate to other networks."

Who comes out ahead? The FCC and DOJ, based on their opposing arguments, would say that consumers, smaller and regional carriers, tech innovators and job seekers will ultimately benefit.

"The big winner of this deal may be Sprint," added Hyers, "which by default becomes the best lower-cost full-service national operator going forward."

Sprint released a statement after AT&T's announcement, commending the FCC, DOJ and state attorneys general who "gave voice to the concerns of consumers across the country."

It added, "This is the right decision for consumers, competition and innovation in the wireless industry."

AT&T added in its statement that it will pay Deutsche Telekom the $4 billion it promised in the event that the deal didn't go through.

So this is really the last we'll hear of this?

If the White House were occupied by an administration less friendly to government regulations and anti-trust law (i.e., a Republican), it wouldn’t surprise me to see a renewal of interest in an AT&T/T-Mobile deal," said Charles King, principal analyst at Pund-IT. "Remember that a similar change was highly beneficial to Microsoft’s resolution of its own anti-trust woes."

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© 2014 Penton Media Inc.

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