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AT&T has finally thrown in the towel for the pursuit of T-Mobile USA.
The Dallas-based company announced Monday that "after a thorough review of its options" it was backing out of the $39 billion deal, thus avoiding a costly and potentially lengthy legal battle.
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Plans to merge were announced in March. The companies said the deal would provide AT&T the opportunity to build out a stronger wireless network by using some of the spectrum available to T-Mobile, eventually leading to stronger service for customers.
"The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled," Monday's statement from AT&T said.
However, many were concerned that the merger would stifle competition in the wireless market and create a duopoly between AT&T and Verizon Wireless. Sprint Nextel, the third largest wireless carrier, expressed almost immediate opposition to the deal. Sprint stock has jumped more than 5 percent in after-hours trading.
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"From the beginning, Sprint has stood with consumers who spoke loudly and clearly that AT&T's proposed takeover of T-Mobile would create an undeniable duopoly that would have resulted in higher prices, less innovation and fewer choices for the American consumer," Sprint said in a statement following the announcement of the merger breakup.
"Sprint commends the Department of Justice, the Federal Communications Commission and the bi-partisan group of state attorneys general who gave voice to the concerns of consumers across the country," the statement continued.
In August, the U.S. Department of Justice filed a lawsuit to prevent the deal from going forward, saying the deal would lead to higher prices and less competition between wireless carriers. The trial was supposed to begin within the next few months.
Sprint and regional carrier C Spire Wireless also filed lawsuits in attempts to block the merger, and those cases were expected to begin following the case with the Justice Department.
The Federal Communications Commission also came out against the deal in November and called for an administrative hearing on the deal. The hearing would have placed the burden of proof on the merging companies that the deal was in the consumer's interest. The FCC is required to approve telecommunications mergers.
Despite the opposition, AT&T and T-Mobile continued to plead their case. AT&T specifically used the public's concern about jobs to promote the merger, saying the deal would create up to 100,000 new jobs as the wireless network was being rolled out.
In a last ditch attempt to keep the merger alive, AT&T and T-Mobile discussed selling off assets to other wireless carriers in order to court favor with regulators. However, deals with companies such as San Diego-based Leap Wireless fell through over concerns that selling off assets wouldn't convince skeptical regulators to approve of the deal.
Wedbush Securities analyst Suhail Chandy told IBTimes he expected the deal would end following the FCC's decision to block the merger.
"After that, I think the market priced the fact that the deal was going to fail," he said.
