AT&T and T-Mobile hinted this Thanksgiving that their merger may be off, but the unpalatable repercussions of ending their eight-month pursuit of a deal suggests they may be playing a game of turkey. Following an antitrust suit from the Department of Justice and a hearing on the merger called by the Federal Communications Commission this week, AT&T (T, Fortune 500) said Thursday it is no longer seeking approval for the merger from the FCC. The wireless giant then set aside $4 billion to cover the break-up fee it will owe Deutsche Telekom, T-Mobile's parent company. If the marriage is not to be, the breakup would be painful for both companies. AT&T would have to pay T-Mobile's parent $3 billion and at least $1 billion worth of wireless spectrum, and it wouldn't gain access to the T-Mobile infrastructure that AT&T hoped to use to build out its next-generation wireless network. Meanwhile, the struggling T-Mobile would have to figure out a new way to stay afloat with a business that is losing revenue and customers in droves. Verizon (VZ, Fortune 500) has expanded its market-leading 4G-LTE network to cover nearly 200 million Americans -- by far the largest next-generation network. Sprint (S, Fortune 500) is ahead of schedule in bringing its new 4G network online and it has begun selling the iPhone. Even regional carrier C Spire is now selling Apple's (AAPL, Fortune 500) iconic smartphone that was exclusive to AT&T nine months earlier. "With the unrelenting scrutiny of the Department of Justice and the FCC, AT&T and Deutsche Telekom are now at the edge of a steep cliff," said Carrie MacGillivray, analyst at IDC. "Both parties need to make this deal work."
http://money.cnn.com/2011/11/24/technology/att_t-mobile_merger/
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