Verizon and its AT&T subsidiary announced plans Monday to cancel their merger agreement, saying the deals would not be a good fit for the company.
The news comes as the tech giants grapple with slowing consumer adoption and mounting consumer complaints that the companies’ products are less reliable and reliable for more money than rivals.
AT&t said the new arrangements would cost it $7 billion annually.
Verizon’s chief executive, Lowell McAdam, said the company would no longer seek regulatory approval for any future transactions with Verizon and would focus instead on “innovative new ways to help customers access the best possible content and services.”
“The time to act is now,” McAdam said in a statement.
The announcement came hours after Verizon and AT&ts announced that they would have reached a $70 billion merger deal, which would have combined the companies largest U.S. wireless service provider, T-Mobile, and its U.K.-based data and voice business.
“The merger will give Verizon greater flexibility to deliver more innovative wireless and data services to consumers while also helping AT&Ts long-term growth,” McAdays statement said.
The agreement would have allowed Verizon to acquire T-Mo for $42 billion, which the carrier already owns.
T-Mobiles chief executive James Dolan said the deal would “make the world’s most valuable wireless network stronger and allow us to continue to offer high-speed LTE services to our customers.”
T-Mobiles had said in February that the deal was too big to pass up, but the company said it was “considering additional options” and would consider further steps toward a deal with Verizon if necessary.
Verizon said Monday that it had received regulatory approval from the Federal Communications Commission for the merger, which could be announced as soon as Tuesday.
“This is a transformative merger for consumers, and the industry, which will provide more affordable wireless services to millions of customers across the country,” McAdams said in the statement.
McAdams statement said Verizon and T-MO had agreed to explore options to expand their combined wireless business, including a potential purchase of a competitor, but that it was premature to speculate on any potential deals.
“T-Mobile will continue to focus on creating new and innovative products, including T-mo, for customers across all of our customers,” McDavid said.
Tmobile, based in Bellevue, Wash., had more than $2 billion in net income for the quarter ended March 31, and had a net loss of $1.1 billion, according to its latest earnings report.
The carrier said it is “making significant progress” in building a larger network and has made significant investments to improve its network reliability and expand network capacity.
Verizon has struggled to get customers to switch from its rival AT&TS network, which it had been selling for years, and to retain them.
AT & T’s customers have complained that the new networks don’t work as expected, and that they are not always able to switch or receive their data.
Verizon also has faced growing complaints about customer service.
ATM said last month that the carriers’ customer service and support services were “not up to par” with other carriers.
Verizon and Verizon Wireless have also been hit by a series of controversies, including an embarrassing sexual harassment scandal that engulfed the company in 2014, and a failed takeover attempt in 2015.
AT and T have been under fire for years over their use of cell site simulators, or Stingray devices that allow law enforcement to listen in on mobile phone calls.
Verizon says the devices track calls made by criminals, spy on cellphones and track the location of people suspected of crimes.
AT says the technology has been used to help track down criminals.