Posted by Shirley Brady on August 31, 2011 11:17 AM
AT&T's offer to bring home some 5,000 jobs to the US as part of its proposed $39 billion purchase of T-Mobile USA has failed to win over the Obama administration.
Reuters, the Associated Press, the Wall Street Journal and Bloomberg are reporting that the Justice Department has filed suit to block the merger, which was announced in March, between the second biggest wireless carrier in the U.S. (AT&T) and the fourth-biggest carrier.
While AT&T will likely definitely contest the DOJ suit, there's one delighted party at the news: Sprint CEO Dan Hesse, who is vigorously opposed to his rivals' merger, which would dwarf his company. (Read Sprint's official response here.)
The Justice Department just confirmed the move, stating in a press release that it's rejecting the deal on antitrust concerns that it would reduce competition and raise prices for mobile customers in the US — or as the DOJ puts it, “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”
Fortune reports that AT&T shares fell nearly 4% on the news, while Sprint shares jumped more than 8%, to $3.83 a piece. The FCC review of the deal will continue, although Bloomberg notes that the agency has never approved a proposed merger that the DOJ opposed.