Federal Govt. files suit to prevent AT&T and T-Mobile merger
The state Department of Justice on Wednesday filed a suit to halt AT&T's proposal on buying T-Mobile USA. The department claimed that the amalgamation, if takes place, would cut down competition and simultaneously elevate prices.
A lawsuit is filed in the Washington Federal Court to prevent a $39 billion deal from taking place between the two mobile companies. The U.S. Justice Department, in its lawsuit, resisted the prospective acquisition, stating that the action should be regarded as a breach of antitrust legislation.
The grand acquisition deal, which was finalized in March, has already triggered resistance from consumer groups. Other telephone services in the fraternity have also raised oppositions against such a mammoth merger of telecom corporates.
As per latest statistics of phone subscribers, At&T is America's second largest cellular phone company, while T-Mobile stands fourth in the competition.
Deputy Attorney General, James Cole stated in a news conference, "We feel the combination of AT&T and T-Mobile would result in tens of millions of consumers across the U.S. facing higher prices, fewer choices, and lower quality products for wireless services,"
This lawsuit is an attempt to assure that nation’s citizen benefit from the competition amongst telecom providers, added the Attorney General.
T-Mobile's future in U.S. remains unstable
The litigation reveals the doubts on T-Mobile's future in the U.S., as the unit of Germany's Deutsche Telekom AG has already had difficulties in facing competition from larger groups.
Meanwhile, Federal Communications Commission (FCC) is yet to finish its review on the proposed acquisition.
In 2010, AT&T’s total revenue was declared over $124 billion, from which its income from wireless business was worth $53.5 billion. On the other hand, T-Mobile’s revenue, from its total 33.6 million users, was accounted at $18.7 billion in 2010.
Responding to the federal lawsuit, AT&T General Counsel, Wayne Watts mentioned in a statement, "We are surprised and disappointed by today's action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated,"