AT&T ends bid to buy T-Mobile

So much for thinking big. AT&T Inc. is bowing out of its $39 billion bid to buy smaller wireless provider T-Mobile USA after the U.S. government tried to block the deal over concerns it would raise prices, reduce innovation and give customers fewer choices. Monday's announcement came as little surprise after the Justice Department sued to block the merger on Aug. 31. The deal looked further in jeopardy when the Federal Communications Commission's chairman also came out against it. The companies withdrew their FCC application last month. Bernstein analyst Craig Moffett said the announcement was "a bit of an anticlimax." "This is like receiving the divorce papers for a couple that's been separated for years," he said. If so, it's a divorce that's left scars. AT&T said this afternoon that in walking away from a possible combination with T-Mobile, "customers will be harmed and needed investment will be stifled." In punting on the deal, AT&T chief executive officer CEO Randall Stephenson said that the company appeared to suggest that the government had gotten in the way of private enterprise. To meet the needs of our customers, we will continue to invest. However, adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC. Second, policymakers should enact legislation to meet our nation's longer-term spectrum needs. The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces." As part of the break-up with Deutsche Telekom, AT&T said it would take a $4 billion charge. The companies had agreed to this break-up fee when they announced the deal in March. AT&T's purchase of T-Mobile from Deutsche Telekom of Germany would have made it the largest cellphone company in the U.S. AT&T is currently the country's second-largest wireless carrier, while T-Mobile is the fourth-largest. An AT&T/T-Mobile combo: Good for consumers? Do you think an AT&T-T-Mobile combination would have led to improved service and lower prices for consumers? YesNoUndecidedVOTE NOWView ResultsPresented By: To be sure, this saga has seemingly lasted forever. Here are the key dates in the chronology: March 20, 2011: AT&T says it is offering $39 billion in cash and stock to buy T-Mobile USA from German telecom company Deutsche Telekom AG. Such a combination would make it the largest cellphone company in the U.S. AT&T is currently the country's second-largest wireless carrier, while T-Mobile is the fourth-largest. Hoping to appease regulators, AT&T promised to spend an additional $8 billion to grow its ultrafast wireless broadband network in rural areas. The company now plans to cover 95 percent of the country with its so-called Long Term Evolution, or LTE, network, rather than 80 percent as was initially planned. March 28: Sprint Nextel Corp., the nation's third-largest wireless carrier, urges the government to stop the proposed deal. Sprint Nextel argues that it would create a duopoly market with AT&T and Verizon Wireless - currently the largest cellphone company - taking the lion's share of customers. April 7: In response to industry consolidation, the Federal Communications Commission approves rules that will require large wireless carriers to open their data networks to smaller regional carriers in areas where they don't have their own systems in place. The big carriers will have to offer reasonably priced network access, and the FCC will resolve any disputes. July 20: The chairman of a Senate subcommittee on antitrust and consumer rights asks federal regulators to block the proposed deal. Sen. Herb Kohl, D.-Wis., says it would result in increased wireless service prices and fewer choices for consumers. He says there would be only three national cellphone companies left, and two of them - AT&T and Verizon - would control almost 80 percent of the market. Aug. 31: AT&T promises to bring 5,000 wireless call center jobs back to the country if regulators allow the deal to go through. The company says that doing so won't mean job cuts for call center employees that are already located in the U.S. Later in the day, the Justice Department files a lawsuit to halt the deal, arguing that it would raise prices for consumers and reduce their wireless choices. AT&T says it will fight the lawsuit and asks for an expedited court hearing. Sept. 16: Justice says seven state attorneys general - from New York, Washington, California, Illinois, Massachusetts, Ohio and Pennsylvania - have joined in its lawsuit. Sept. 21: A judge sets Feb. 13 as the trial date. Nov. 22: Julius Genachowski, the chairman of the Federal Communications Commission, comes out against the merger. He recommends sending the case to an administrative law judge for review and a hearing, which is what the FCC does when it opposes a merger. Nov. 23: AT&T and T-Mobile withdraw their FCC application to focus on the Justice Department's lawsuit. The withdrawal was made "without prejudice," meaning the companies could resubmit it later. Nov. 25: AT&T says it plans to take a pretax accounting charge of $4 billion in the current quarter to reflect the break-up fees that would be due to Deutsche Telekom if regulators block the deal. Dec. 9: The Justice Department says it wants to withdraw or postpone its antitrust case. A government official says there's no real deal to review until the companies file again with the FCC. Dec. 12: AT&T and the Justice Department agree to put off their upcoming antitrust trial while the wireless carriers determine the fate of the deal. A federal judge approves their request to cancel a February trial. Dec. 13: AT&T and two of its rivals agree to postpone their lawsuits. Sprint Nextel Corp., the nation's third-largest cell phone company, and a smaller phone company, C Spire Wireless, had sued to stop the T-Mobile deal. Monday: AT&T says it is ending its bid after "a thorough review of options."