AT&T Inc. is bowing out of its $39 billion bid to buy smaller wireless provider T-Mobile USA after the U.S. government raised concerns that it would raise prices, reduce innovation and give customers fewer choices.

Monday’s announcement came as little surprise after the Justice Department sued on Aug. 31 to block the merger. The deal looked further in jeopardy when the Federal Communications Commission’s chairman also came out against it. The companies withdrew their FCC application last month.

Sanford Bernstein analyst Craig Moffett said the announcement was “a bit of an anticlimax.”

“This is like receiving the divorce papers for a couple that’s been separated for years,” he said.

AT&T’s purchase of T-Mobile from Deutsche Telekom of Germany, announced in March, would have made it the largest cellphone company in the U.S. AT&T is now the second-largest wireless carrier behind Verizon Wireless, and T-Mobile is fourth.

AT&T will now have to pay Deutsche Telekom $3 billion in cash as a breakup fee and give it about $1 billion worth of airwaves, known as spectrum, that AT&T doesn’t need for the continued rollout of its high-speed 4G network.

It will also enter into a roaming agreement with Deutsche Telekom so that AT&T’s and T-Mobile’s customers can use each other’s networks.

AT&T will take an accounting charge of $4 billion in the current quarter.