The telco does have a shortage of wireless airwaves and buying DT would have solved that problem. Deutsche Telekom would have sorted out its problems with T-Mobile USA which is losing it cash.
However, the deal was always going to be difficult to get past the regulators and according to Reuters means that AT&T Chief Executive Randall Stephenson’s judgement is being called into question. Stephenson was surprised by the strength of regulatory opposition which anyone should have spotted.
The deal would have made AT&T the number one telco in the US and Stephenson was so sure he would get approval that he promised Deutsche Telekom a record break-up package that will cost it $4 billion this quarter.
Steve Clement, an analyst at Pacific Crest Securities told Reuters that it was a complete “miscalculation” by AT&T.
Deutsche Telekom CEO Rene Obermann might have won on the break-up package but failure of the sale killed off a dream come true for the German telephone company. Deutsche Telekom wanted to use the sale to pay debt, launch a $6.51 billion share buyback and step up investments in Europe.
He has been forced to find more cash to invest billions more in the US market or find a new way to exit the country.
There is also the spin off that the AT&T deal failure may have companies thinking that buying other firms to bolster their competitive position is a bad idea.