The US State Department of Justice sued AT&T, Americas second largest mobile carrier for its plans to acquire T-Mobile along with its complete assets. The decision was made after AT&T revealed its plans to purchase America’s fourth spot telecom giant for 39 billion dollars in cash and stock.
According to department of justice the decision was made for the reasons that that purchase would wipe out the completion from the market which would ultimately result in poor quality service, price rise and less options for general public.
America’s four largest groups in telecom are Verizon, At&t, Sprint and T-mobile. These four mammoth groups accounts to 90 % of total user subscription in USA. What we think is that merging of second and last among the four would endanger the remaining two as well.
The department of justice also kept in their mind the huge competition among the telecom providers in United States. The merging of two big fishes again would steal the bread of low cost and small service providers.
Also expected is the deal would could possibly tighten the room for new innovative products to evolve for the US citizens. The department of justice in its hearing said
“This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition.”
The war of words has already begun. At&T in its press report said that At&t is “surprised and disappointed” by government’s rulings. Also At&t is planning for an expedited hearing to review the merge.
At&T also made claims that the proposed deal would solve the current spectrum exhaustion crisis in the country. The upcoming 4G services would be better serviced said AT&T.
AT&T is quite sure about the deal and says it is a better one for its customers and hopes the facts will prevail in court. As of now AT&T bags 92 million customers across the country.
If things don’t go as intended for AT&T then it will be in the dock for 3 billion dollars what they call it as a breakup fee.