AT&T Left With Few Options After T-Mobile Bid

The collapse of AT&T’s $39 billion bid for T-Mobile USA leaves the second-largest U.S. mobile carrier with few attractive strategic options as it seeks to challenge market leader Verizon Wireless.

To accommodate data-usage growth, AT&T argued it needed the airwaves the T-Mobile USA purchase would have brought. With that option now unavailable, AT&T can either seek to buy spectrum from another company, wait for the government to auction more frequencies or try to squeeze more capacity out of its current airwaves. Each option is time-consuming, expensive and risky, said Colby Synesael, a Cowen & Co. analyst in New York. Already criticized for dropped calls and network coverage, AT&T will face more constrained capacity than Verizon Wireless, Synesael said. That may hurt customer growth at a time when carriers are seeking to sign up lucrative smartphone and tablet subscribers who will generate revenue for years to come. Earlier this year, AT&T lost U.S. exclusivity to the Apple Inc. iPhone. While AT&T focused on winning regulatory approval for the takeover, rivals negotiated their own airwave deals. That means several spectrum assets that would have still been available for AT&T to purchase earlier this year are now off the market.