Justice Department blocks AT&T-T-Mobile merger

Justice Department blocks AT&T-T-Mobile merger

August 31st, 2011 by Associated Press in Local - Breaking News

Deutsche Telekom Chairman and CEO Rene Obermann, left, and AT&T Chairman and CEO Randall Stephenson pose for photos in New York in March. AT&T Inc. has made a bid to buy T-Mobile USA from Deutsche Telekom AG in a cash-and-stock deal valued at $39 billion. (AP Photo/Newscast, Mark Dye)

WASHINGTON - The Justice Department is blocking AT&T's $39 billion deal to buy T-Mobile USA, saying the acquisition of the No. 4 wireless carrier in the country by No. 2 AT&T would reduce competition and raise prices.

The deal has faced tough opposition from consumer groups and No. 3 carrier Sprint since it was announced in March.

AT&T could challenge the Justice Department's action in court.

A failure of the deal puts T-Mobile in a difficult position. It's struggling to compete with the larger carriers, and owner Deutsche Telekom AG has said it's not willing to invest more in the venture.

However, AT&T has promised T-Mobile $3 billion in cash if the deal doesn't go through, plus spectrum rights and agreements that could be worth billions more.

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