AT&T Losing T-Mobile Seen Spurring Exodus on Dropped Calls

The Justice Department’s effort to block the takeover of T-Mobile USA Inc. chokes off AT&T’s path to an expanded network and wrecks its plan to gain as much as $20 billion in airwaves to help handle surging call volume. If AT&T fails to gain T-Mobile’s network, some of its 98.6 million customers may defect to rivals to avoid dropped calls and get access to faster services for smartphones and tablets.

Besides paying a $3 billion breakup fee, AT&T would also have to transfer some of its spectrum to T-Mobile, further squeezing its network capacity and stalling plans for growth. If the T-Mobile deal falls through, the company may have to scale back its plans to deploy faster networking technology, Kevin Smithen, an analyst at Macquarie Securities. While AT&T still might seek to acquire spectrum from other companies, such as Comcast, Dish Network, Clearwireor LightSquared, any other deals are now going to be viewed with skepticism because they are likely to face similar regulatory scrutiny, Smithen said.