Caution over AT&T and T-Mobile USA deal

Lawmakers on both sides of Congress have responded cautiously to AT&T’s proposed $39bn acquisition of Deutsche Telekom’s US mobile phone business, as consumer groups worry about the effect the deal would have on household bills.

The US telecoms company’s plan to buy T-Mobile USA would reduce the number of large mobile network operators from four to three. Telecoms analysts said industry consolidation should provide the remaining mobile operators with greater pricing power and therefore higher profit margins. Although mobile customers may not see their bills rise after consolidation, reduced competition could slow the rate of industry price declines. AT&T, by purchasing T-Mobile USA for $39bn in cash and stock, would leapfrog Verizon Wireless to become the leading US mobile operator. The deal must first obtain clearance from the Department of Justice and the Federal Communications Commission, and the expected intense level of regulatory scrutiny means the transaction is not due to be completed until the first half of next year.