AT&T’s purchase of T-Mobile blocked with government lawsuit?


I wrote a while back about AT&T's bid to purchase T-Mobile. I wanted to look whether or not having such a large provider as the only choice for a GSM carrier would be damaging to the security industry. Whether or not it might prompt others to throw their hat in the ring as wireless service providers to the industry.

I, and others, argued that it might be dangerous from a service and pricing perspective to have one giant wireless provider being the only place security folks could go for their GSM needs.

I picked up this story today from the New York Times. Apparently the US Justice Department is suing to block the acquisition, claiming "The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for their mobile wireless services." That last quote was from James M. Cole, the deputy attorney general. The Justice Department’s complaint was filed in United States District Court in Washington on Aug. 31.

Of course, their looking to block the acquisition with an eye on the end user. However, it stands to reason that the same negatives listed above would plague security folks looking to leverage GSM technology in security solutions, doesn't it?

AT&T has vowed to "vigoriously contest" the matter in court.

The Times story points out AT&T has some pretty strong reasons to want the deal to go through:

AT&T has one powerful incentive to try to salvage the deal. Under the terms of the agreement that AT&T signed with Deutsche Telekom, AT&T would pay a breakup fee of $3 billion in cash, as well as a roaming agreement and spectrum rights — an estimated total value of $6 billion — if the acquisition did not go through for regulatory reasons.

Other wireless providers, such as Sprint, which entered the security industry as a partner with Cernium this summer, have voiced opposition to the merger.

“Sprint urges the United States government to block this anticompetitive acquisition,” Vonya McCann, Sprint’s senior vice president for government affairs, said back in March. “This transaction will harm consumers and harm competition at a time when this country can least afford it.”

The Times story notes shares of AT&T dropped nearly 4 percent on the news of DOJ's suit, to less than $29. Shares of Deutsche Telekom, the parent of T-Mobile, fell 5 percent in trading in Frankfurt. Shares of Sprint Nextel were up nearly 6 percent, according to the Times.

It will be interesting to see how the deal--or if the deal--goes down.