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AT&T Drops Bid To Purchase T-Mobile USA

This June 2, 2010, file photo shows the AT&T logo in Washington, D.C.
Etienne Franchi
AFP/Getty Images
This June 2, 2010, file photo shows the AT&T logo in Washington, D.C.

After the federal regulators raised questions about AT&T's bid to buy T-Mobile USA, the telecommunications company said it was scrapping its $39 billion bid. The merger would have made AT&T the largest wireless carrier in the United States.

Back in August, the Justice Department sued to block AT&T from acquiring T-Mobile and then in November the Federal Communications Commission joined Justice in opposing the merger, saying it would not be in the public interest.

AT&T issued a statement today with its decision saying that the realities of the wireless market haven't changed because of the actions of Justice and the FCC. Wireless spectrum is still scarce and AT&T will have to take action to meet its customers' needs, they said.

"Adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC," Randall Stephenson, AT&T chairman and CEO, said in a statement. "Second, policymakers should enact legislation to meet our nation's longer-term spectrum needs."

Abandoning the deal will cost AT&T $4 billion. Some of it, reported The Wall Street Journal, will be tax-deductible so by some estimates the company's cash impact will be about $1.5 billion.

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Eyder Peralta is NPR's East Africa correspondent based in Nairobi, Kenya.