AT&T's battle to save T-Mobile deal
(CBS) - Telecommunications giant AT&T fights for the right to purchase T-Mobile USA and surpass Verizon Wireless as the top mobile service provider.
The Department of Justice filed a civil antitrust lawsuit in U.S. District Court for the District of Columbia Wednesday against AT&T to block the acquisition of T-Mobile USA.
A press release by the Department of Justice stated: "the proposed $39 billion transaction would substantially lessen competition for mobile wireless telecommunications services across the United States, resulting in higher prices, poorer quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives."
"Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation's wireless carriers, particularly the four remaining national carriers. This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition," said Deputy Attorney General James M. Cole.
According to CNET, if the deal fails, AT&T will still have to pay out a $6 billion break-up fee, "which would include $3 billion in cash to T-Mobile USA, and $2 billion in spectrum space and $1 billion in a roaming agreement to T-Mobile's parent Deutsche Telekom."
With so much at stake, AT&T won't back down without a fight. The company will have to take steps to win the right to purchase T-Mobile USA.
Reuters sources say that AT&T would have to promise to maintain T-mobile's price plans and asset sales. The telecom company would also have to have to sell up to 25 percent of T-Mobile's business, including airwaves and customers.
These two moves could help ease the government's concern that "three companies would control 90 percent of the U.S. wireless market if the merge goes through."
AT&T is one of the largest communications company in the world and second largest mobile wireless provider in the U.S. Verizon Wireless tops the list, while Sprint and T-Mobile come in third and fourth place.
