There goes the $4B break-up fee that AT&T promised to pay T-Mobile owner Deutsche Telekom if the merger went awry. Meanwhile, shares of Sprint Nextel — which risked being marginalized by the AT&T/T-Mobile combo — are up 7.9% in after-hours trading, after falling 4% during the day. AT&T’s dream deal effectively was cooked after the Justice Department and FCC said that a merger would result in less competition and higher consumer prices. Justice said it would sue to block the deal, and the FCC began a process that promised to drag things out even more. But AT&T says that its decision to scrap the plan doesn’t change the fact that wireless carriers need more spectrum. “The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage,” the company said. “In the absence of such steps, customers will be harmed and needed investment will be stifled.” CEO Randall Stephenson added that his company “will continue to invest” in wireless. He urged lawmakers to approve AT&T’s bid to buy spectrum controlled by Qualcomm, and ”enact legislation to meet our nation’s longer-term spectrum needs.” That’s code for: Let’s pry spectrum away from TV broadcasters.


Ouch. That’s gonna be one expensive lump of coal.
In the long run, this doesn’t mean squat, however. If Deutsche Telekom is serious about leaving the US market, which they have been saying they are for the last two years, they will take their billion dollar payout from AT&T, pull out stakes, and sell off their network and bandwidth to the highest bidder. Verizon and Sprint, being CDMA networks, aren’t going to have much interest in a GSM network, so unless they want to play a disturbingly expensive game of keep-away with AT&T, Ma Bell is gonna end up with T-Mo’s network regardless.
Oh, and all those T-Mo employees the FCC said would lose their jobs if the merger were allowed to go through? They’ll be fired anyway unless they want to move to Europe when the company takes their ball and goes home. Good job, Government, you just wasted millions of dollars and countless man-hours making sure that absolutely no one is happy. Merry Christmas to you too.