US authorities fired a legal broadside to block AT&T’s $39 billion acquisition of T-Mobile, launching its biggest challenge yet to a takeover and dealing the carrier a potentially costly blow.

AT&T plans to fight the government’s decision in court and analysts say it might have to make big concessions – including selling major assets – to mollify regulators.

Shares in AT&T, the second largest US carrier behind Verizon Wireless, fell as much as 5.4 per cent. If the deal falls through, it may have to pay a break-up fee and benefits, such as spectrum grants, worth an estimated $6 billion.

Regulators fear eliminating T-Mobile would raise prices for consumers. – (Reuters)