After lobbying intensely for months for its proposed $39billion takeover of its smaller US rival T-Mobile, AT&T announced on Monday that it has decided to scrap the T-Mobile merger deal because it was unsuccessful in overcoming stiff competition from the government.

The scrapping of the deal means that, in accordance with the terms of the March-announced merger, AT&T will pay T-Mobile’s parent Deutsche Telekom $4 billion in cash and wireless spectrum access as a break-up charge.

Since the materialization of the T-Mobile takeover deal would have ended up making AT&T the largest US cellphone provider, the scrapping of the deal is apparently a major setback for AT&T as it might hinder the growth prospects which the company was hopeful of.

AT&T was seeking cellular airwaves, or spectrum, from the T-Mobile network in an apparent attempt to ease its own extremely congested network as well as to offer notably much speedier service for data-hogging devices such as the Apple iPhone.

Blaming the regulators for the demise of its merger with T-Mobile, AT&T said in a statement that the scrapping of the deal will not only harm the consumers but will also stifle investment.

Meanwhile, in a contradiction of the AT&T statement, Sharis A. Pozen – the Department of Justice’s acting assistant attorney general for antitrust – sided with the consumer advocates in opinion that the deal would have created a duopoly of AT&T and Verizon; and added: “Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation.”