LOS ANGELES – The end might be near for AT&T Inc.’s proposed $39 billion purchase of T-Mobile USA Inc.

Facing growing opposition, telecommunications giant AT&T announced Thursday that it is withdrawing its merger plan from further consideration by the Federal Communications Commission.

Instead, it said it will concentrate on winning approval from the U.S. Justice Department, which sued to stop the purchase. And, in case the deal collapses, the company said it is setting aside the $4 billion it would owe in breakup fees to T-Mobile’s German owner, Deutsche Telekom.

The company’s decision was announced days after FCC Chairman Julius Genachowski said he opposed the merger, which would create the nation’s largest wireless company. Genachowski proposed an administrative hearing — a rare and lengthy process last used for a major deal in the 1960s.

The two companies announced the merger last spring, saying the deal would enable AT&T to speed up the spread of fast, next-generation wireless service while increasing competition and lowering prices.

But opponents, including government agencies, consumer advocates and competitor Sprint Nextel Corp., objected. They argued that a combination of second-ranked AT&T with fourth-ranked T-Mobile would leapfrog current subscriber king Verizon Wireless. The hybrid company would end up with 75 percent of wireless subscribers and nearly 80 percent of revenue, according to the nonprofit American Antitrust Institute.

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That sparked dire predictions of shrinking competitive options that would cause tens of millions of customers to pay more for deteriorating service while also trampling demand for technicians and engineers. The merger, many fear, would trigger as many as 20,000 layoffs.

“This merger would kill competition, put tens of thousands of people on the unemployment line, and leave all of us paying more for our mobile phones,” Craig Aaron, chief executive of advocacy group Free Press, said in a written statement. “No amount of spin can change the fact that this deal is cooked. It’s time for these companies to walk away.”

AT&T has said that it intends to invest $8 billion to expand the broadband network, including to rural areas, and create 96,000 jobs while doing so. The company has also promised to bring 5,000 call-center jobs to the U.S. from other countries.

In joint statements released Thanksgiving Day, when financial markets were closed, the companies said they would try again for the FCC’s approval “as soon as practical” and stressed that they “are continuing to pursue the sale.”

To succeed, the deal must clear both the FCC and the Justice Department — a requirement that is looking increasingly tough. “The chances that AT&T will take over T-Mobile are almost gone,” Gigi B. Sohn, president of consumer advocacy group Public Knowledge, said in a written statement.

Sohn, whose group opposes the deal, said that AT&T’s retreat “speaks volumes about the company’s lack of confidence.”

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She and other consumer advocates said they suspect that the telecom giants withdrew their applications to prevent the FCC from publicly disclosing findings in a hearing about the merger’s potentially ruinous consequences on competition and pricing for services.

If AT&T and T-Mobile manage to avoid a hearing, they said they plan to “consolidate their strength and to focus their continuing efforts” on winning or settling a civil antitrust lawsuit filed by the Justice Department in August. The suit, backed by California Attorney General Kamala D. Harris and several other state attorneys general, seeks to block the deal.

Consumer advocates like Sohn said the companies were wasting their time. “We hope,” she said, “that AT&T would similarly withdraw its application from the Justice Department and end this charade once and for all.”

 


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