Well, so much for that. AT&T announced today that it and Deutsche Telekom have agreed to drop the proposed acquisition of T-Mobile by AT&T that was announced earlier this year. The news comes hot on the heels of a report that AT&T's attempts to sell off some T-Mobile assets in order to gain approval of the deal had stalled. As for what caused the decision, AT&T pointed to the FCC and Department of Justice's attempts to block the deal, adding that a combined AT&T-Mobile would've helped provide a temporary solution to a spectrum crunch. As a result of the merger's death, AT&T says, customers will be harmed. 

Now that the deal is dead, AT&T will be paying $4 billion to Deutsche Telekom, which consists of $3 billion in cash and $1 billion worth of spectrum. Additionally, AT&T has said that it'll enter a "mutually beneficial roaming agreement with Deutsche Telekom."

We heard rumblings late last night that AT&T was considering abandoning this deal altogether, but it's still kind of a surprise to see it actually happen. Still, things have been getting a tad hairy for the deal over the past few months as it kept running into new stumbling blocks, including an antitrust suit from the Justice Department and the possibility of an FCC hearing. It should be interesting to see where things go from here, as we've heard in the past that AT&T and Deutsche Telekom may be interested in forming a joint venture should the deal fall through. Additionally, the CEO of Dish Network has indicated that his company would be interested in merging its spectrum with T-Mobile's existing network. What'll end up happening is anyone's guess, but you can be sure that we'll keep you updated. In the mean time, AT&T's press release announcing the news is below.

UPDATE: Sprint, which has long been opposed to the AT&T/T-Mobile deal, issued a statement on today's news shortly after it broke. Unsurprisingly, Sprint is pretty pleased with AT&T and Deutsche Telekom's decision to abandon the acquisition, saying that "this is the right decision for consumers, competition and innovation in the wireless industry." Sprint added that it looks forward to competing in the "robust, competitive" wireless market and continuing to serve its customers in the future. The full statement from the Now Network is below.

Sprint statement on decision by AT&T and Deutsche Telekom to end bid to acquire T-Mobile USA

OVERLAND PARK, Kan. (BUSINESS WIRE), December 19, 2011 - Vonya B. McCann, senior vice president of Government Affairs for Sprint (NYSE: S), issued the following statement in response to AT&T’s decision to end its bid to takeover T-Mobile USA:

“Earlier today, AT&T terminated its definitive merger agreement with Deutsche Telekom to acquire T-Mobile USA. This is the right decision for consumers, competition and innovation in the wireless industry.

“From the beginning, Sprint has stood with consumers who spoke loudly and clearly that AT&T’s proposed takeover of T-Mobile would create an undeniable duopoly that would have resulted in higher prices, less innovation and fewer choices for the American consumer.

“Sprint commends the Department of Justice, the Federal Communications Commission and the bi-partisan group of state attorneys general who gave voice to the concerns of consumers across the country. We look forward to competing fiercely in the robust, competitive market that exists today and continuing to deliver the world class service and products that consumers have come to expect from Sprint.”

About Sprint Nextel

Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 53 million customers at the end of 3Q 2011 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. The 2011 American Customer Satisfaction Index showed Sprint is the #1 most improved company in customer satisfaction, across all industries, over the last three years. Newsweek ranked Sprint No. 3 in its 2011 Green Rankings, listing it as one of the nation’s greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.

AT&T Ends Bid To Add Network Capacity Through T-Mobile USA Purchase

Company Reaffirms Its Commitment to Mobile Broadband Leadership

Dallas, Texas, December 19, 2011

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AT&T Inc. (NYSE: T) said today that after a thorough review of options it has agreed with Deutsche Telekom AG to end its bid to acquire T-Mobile USA, which began in March of this year.

The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage.  In the absence of such steps, customers will be harmed and needed investment will be stifled.

“AT&T will continue to be aggressive in leading the mobile Internet revolution,” said Randall Stephenson, AT&T chairman and CEO.  “Over the past four years we have invested more in our networks than any other U.S. company. As a result, today we deliver best-in-class mobile broadband speeds – connecting smartphones, tablets and emerging devices at a record pace – and we are well under way with our nationwide 4G LTE deployment.

“To meet the needs of our customers, we will continue to invest,” Stephenson said. “However, adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC.  Second, policymakers should enact legislation to meet our nation’s longer-term spectrum needs.

“The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces,” Stephenson said.

To reflect the break-up considerations due Deutsche Telekom, AT&T will recognize a pretax accounting charge of $4 billion in the 4th quarter of 2011.  Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom.

*AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.

About AT&T

AT&T Inc. (NYSE:T) is a premier communications holding company and one of the most honored companies in the world. Its subsidiaries and affiliates – AT&T operating companies – are the providers of AT&T services in the United States and around the world. With a powerful array of network resources that includes the nation’s fastest mobile broadband network, AT&T is a leading provider of wireless, Wi-Fi, high speed Internet, voice and cloud-based services. A leader in mobile broadband and emerging 4G capabilities, AT&T also offers the best wireless coverage worldwide of any U.S. carrier, offering the most wireless phones that work in the most countries. It also offers advanced TV services under the AT&T U-verse® and AT&T | DIRECTV brands. The company’s suite of IP-based business communications services is one of the most advanced in the world. In domestic markets, AT&T Advertising Solutions and AT&T Interactive are known for their leadership in local search and advertising.

Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at http://www.att.com. This AT&T news release and other announcements are available at http://www.att.com/newsroom and as part of an RSS feed at www.att.com/rss. Or follow our news on Twitter at @ATT.

© 2011 AT&T Intellectual Property. All rights reserved. Mobile broadband not available in all areas. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Via Wall Street Journal