1 Sep 2011

Phone company merger threatened by US govt

9:30 am on 1 September 2011

A bid by ATT to buy T-Mobile USA could be facing collapse, after the federal government sued to block the $US39 billion deal.

ATT agreed in March to buy the company from Deutsche Telekom, aiming to create the largest wireless network in the United States.

But the Justice Department says the merger would lead to higher prices and restrict choice and has sought a court order to stop it.

The department argues that the merger would combine two of the four companies who provide 90% of the mobile phone services in the US.

Deputy US Attorney General James Cole says the deal is not good for consumers.

ATT says it will fight the government's move.

Earlier, ATT also said it would repatriate 5000 call-centre jobs from overseas if regulators approved the deal.

The BBC reports the former monopoly was broken up by regulatory authorities into eight separate companies in the early 1980s.

ATT has grown through a serious of mergers since then.