a statement that it would continue to invest in wireless spectrum, but could not overcome resistance from both the Justice Department and the Federal Communications Commission. It added that American wireless customers “will be harmed and needed investment will be stifled” by the regulators’ decisions.

AT&T had lain the groundwork for its decision in recent weeks, including by withdrawing its proposal for F.C.C. approval and by asking a federal judge to postpone proceedings in a lawsuit filed by the Justice Department. Both regulators have indicated strong opposition to the deal.

Under the terms of the deal, AT&T will pay Deutsche Telekom $4 billion in cash and wireless spectrum as a break-up fee, and the two companies will begin a seven-year roaming agreement that will expand T-Mobile’s national coverage.

Since unveiling the proposal in March, AT&T has consistently argued that it needed T-Mobile to expand its wireless spectrum holdings to provide higher-speed service. Taking over its smaller rival, it said, would relieve its congested networks and expand its next-generation data network to rural areas.

The deal was spearheaded by Randall L. Stephenson, AT&T’s chairman and chief executive, in his first bold deal since taking the reins of the telecom behemoth in 2007.

To support the deal, AT&T went on a charm offensive, lining up an assortment of lawmakers, corporate customers and local partners to tout the benefits of the merger.

But that campaign held little sway over government regulators, however, who were unmoved by arguments that uniting two of the nation’s biggest wireless companies would not harm competition. The Justice Department joined with several state attorneys general in its antitrust lawsuit and hired prominent outside counsel. And the F.C.C. published its staff’s 157-page internal report laying out its concerns about the deal.

Courtesy Google News

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