Market Overview

AT&T Pulls Plug On Merger


Editor's note: This article originally posted @ 10:30 p.m. Monday, over at Market Ticker

Out this afternoon....

AT&T Inc. (T) abandoned a $39 billion bid to acquire T-Mobile USA after opposition from U.S. regulators, thwarting its effort to become the country's biggest wireless carrier.

The company will take a pretax charge of $4 billion to reflect cash payments and other considerations due to T-Mobile- owner Deutsche Telekom AG (DTE), according to a statement today from the Dallas-based company.

Who wins and loses on this?

T-Mobile wins. They get the break fee. And as I've noted previously I think they were either expecting this to happen or at least hedging it, as they've been adding a massive amount of 4g tower capacity around in secondary markets -- including mine. Coverage along the I-10/I-75 path has literally doubled in 4g/3g density over the last six months -- large swaths that used to be GPRS only (~40kbps) are now screaming fast and lit with UMTS. That nice hunk of cash isn't going to hurt them one bit, and while they'll have to find their feet their pricing is pretty darn good

Sprint wins. The threat of being a "never-has-been" has just dissipated materially. Never mind that now they are a potential target, although I see that as rather unlikely. They don't win so much from direct effects but rather from the wounding of the guy on top of them, AT&T. Their stock was up some 7% after the market closed on the news, so much how already got priced in is unknown. Nonetheless that's a hell of a nice move after hours, albeit on a $2.15 stock that was down 4% earlier today.

AT&T isn't going to be....

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