You heard right. Bloomberg is reporting that the United States government (!) just filed court papers in Washington, D.C. to block the much ballyhooed tie-up between AT&T and T-Mobile USA. Oddly enough, T-Mobile and AT&T promised this morning that a total of 5,000 jobs would be hand delivered to the US if the two telcos were allowed to become one, but it'll take a heck of a lot more convincing now. For what it's worth, this doesn't mean that the deal is or isn't happening -- it's just another step in the process -- but it most certainly doesn't bode well for proponents. Nor for AT&T's share price.

According to the report, the Justice Department feels that the deal would "substantially lessen competition" in the wireless space. In fact, it boldly stated the following: "AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market." If things end up falling apart, it's important to remember that AT&T would be forced to pay Deutsche Telekom $3 billion as a break-up fee, which ought to make Tiger Woods' misfortunes look like an outright bargain.

Update: Full press release is now embedded after the break, and meanwhile, Federal Communications Commission Chairman Julius Genachowski has issued the following public statement: "Although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition."

Update 2: Wayne Watts, AT&T Senior Executive Vice President and General Counsel, issued the following statement (seen after the break)...

[Thanks to everyone who sent this in]


· Help solve our nation's spectrum exhaust situation and improve wireless service for millions.


Update 3: Not like anyone asked 'em, but Sprint's just entered the conversation with a statement of its own: Vonya B. McCann, senior vice president of Government Affairs for the carrier, had this to say:

Pretty amazing how two companies in the exact same business can see this so differently.

Update 4: The Wall Street Journal now also has T-Mobile parent company Deutsche Telekom's response to the news. It's as follows:


The Company is very disappointed by the DOJ's action, and will join AT& T in defending the contemplated merger against the complaint in court. DOJ failed to acknowledge the robust competition in the U.S. wireless telecommunications industry and the tremendous efficiencies associated with the proposed transaction, which would lead to significant customer, shareholder, and public benefits. We appreciate the DoJ's willingness to discuss possible remedies to address the competitive concerns.

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