U.S. moves to block AT&T, T-Mobile deal

August 31, 2011 at 2:27 pm | Posted in Aerospace Law Interfaces, Telecommunications | Leave a comment

by Sara M. Langston with the blog faculty

Source: Reuters

(Reuters) – The Obama administration on Wednesday fired a legal broadside to block AT&T Inc’s $39 billion acquisition of T-Mobile, launching its biggest challenge yet to a takeover and dealing the carrier a potentially costly blow.

AT&T plans to fight the government’s decision in court and analysts say it might have to make big concessions — including selling major assets — to mollify regulators.

Shares in the No. 2 U.S. carrier behind Verizon Wireless fell as much as 5.4 percent. If the deal falls through, it may have to pay a break-up fee and benefits, such as spectrum grants, worth an estimated $6 billion.

The Justice Department in a lawsuit filed in federal court said eliminating T-Mobile as a competitor would be disastrous for consumers and would raise prices, particularly because the smaller provider is considered a pioneer in low-cost service plans. [more]