HispanicBusiness

Last spring, Sprint Nextel dressed up a stocky guy in a dress much like the pink polka dot number that adorns the attractive young woman in ubiquitous ads for T-Mobile USA.

His picture appeared in an ad placed strategically to catch the eye of Washington policymakers and to urge them to block AT&T's plan to buy T-Mobile from Deutsche Telekom AG.

The man in the sun dress had a cigar in one hand, and below him the ad read: "No matter how you dress it up, this takeover is bad for consumers and the economy. Tell Congress to help stop AT&T's takeover of T-Mobile."

It looks as if it might be time for Sprint to fire up the cigar in celebration.

Developments this week make a merger that Wall Street once assumed would sail through now look all but sunk.

AT&T says it still wants to take over T-Mobile, but its withdrawal of an application with the Federal Communications Commissions sends a strong signal that it's cashing out.

"It looks as if they've admitted almost total defeat," said Donna Jaegers, a telecommunications analyst with D.A. Davidson & Co.

The deal's demise could set off a new round of possible mergers or acquisitions in the nation's highly competitive wireless industry. Overland Park-based Sprint, among the largest private employers in the Kansas City area, declined comment Friday.

The most speculated deal imagines Sprint's buying up what AT&T apparently won't be able to: T-Mobile. No. 3 Sprint had been rumored to be talking with Deutsche Telekom about acquiring No. 4 T-Mobile when AT&T announced its plans to snatch up the carrier.

"If (Sprint chief executive) Dan Hesse isn't already talking to Deutsche Telekom," Jaegers said, "he will be shortly."

Verizon controls 34 percent of the U.S. wireless market, AT&T 32 percent, Sprint 17 percent and T-Mobile 10 percent. If the AT&T merger went through, Verizon and AT&T would have had three out of every four cell customers in the country.

Sprint hired a new stable of Washington lobbying firms and teamed with a handful of consumer groups early this year to argue that the AT&T deal would have amounted to a duopoly likely to smother competition and innovation.

AT&T had argued that the merger fit neatly with the Obama administration's explicit goals of rapidly spreading wireless broadband coverage in rural areas -- that a combined AT&T/T-Mobile network was the fastest way to expand service. That's why some analysts expected the deal to clear regulatory scrutiny, and expected the best Sprint might hope for was to force the merged companies to sell off some spectrum and customers as part of the terms of approval.

But in the months after the deal was proposed to the FCC -- the commission must approve T-Mobile's transfer of radio spectrum licenses to AT&T -- the Occupy Wall Street movement and other political shifts have generated distaste for corporate consolidation. And suspicion built that the FCC doubted claims that the merger would create jobs.

Meantime, the Obama Justice Department filed suit to block the merger. Then word began to leak that the FCC's staff analysis found little to like about combining the second and fourth largest carriers in the country. Earlier this week, FCC Chairman Julius Genachowski said the deal did not meet the agency's standards. And this week he sent his fellow commissioners a request to refer the case to an administrative law judge -- a move almost certain to protract the approval process.