AT&T to Buy T-Mobile USA for $39B

AT&T Inc. (NYSE: T) said Sunday afternoon that it has entered into a $39 billion deal with Deutsche Telekom AG (NYSE: DT) to buy its American subsidiary, T-Mobile US Inc. , which would make it the largest carrier in the U.S.

Under the terms of the deal, AT&T will pay $25 billion in cash and the remainder in stock for T-Mobile, giving Deutsche Telecom an 8 percent stake in AT&T and a seat on its board. Both operators' boards have approved the deal. The major sticking point for the buyout is likely to be U.S. regulatory approval. The acquisition would add nearly 34 million customers to AT&T's books, giving it close to 130 million users and handily beating the next largest carrier, Verizon Wireless , which has over 94 million subs.

It is not yet clear how authorities will react to the deal. AT&T and DT say it could take up to a year to close the acquisition.

For its part, however, AT&T is not being shy in pointing out what it perceives as the benefits of the acquisition to the U.S. populace:

AT&T said, in a statement, that it is planning a "significant expansion" of robust LTE deployment to 95 percent of the U.S. population with plans to reach an additional 46.5 million Americans beyond current plans -- including rural communities and small towns.

This, the company says, will help to achieve the Federal Communications Commission (FCC) and President Obama's goals to connect "every part of America to the digital age." AT&T expects to spend $8 billion on additional network development.

Buying out T-Mobile, however, should give AT&T additional capacity benefits in the short to medium term, as well benefits for its 3G network. The operators currently use compatible GSM 3G technology but on slightly different radio frequencies.

For instance, AT&T's 3G iPhone users can now potentially crack their devices to run on T-Mobile, but they are only capable of running on the older EDGE network on T-Mobile. It should be relatively simple, however, for the next generation of AT&T phones to support the relevant advanced wireless spectrum (AWS) frequencies used by T-Mobile.

T-Mobile, meanwhile, is planning to upgrade much of its current network to 42Mbit/s-capable 3G this year. The operator, however, had no obvious route to deploy 4G LTE because it lacked the spectrum. The path now becomes clear with an AT&T buyout.

The big loser in the deal could be Sprint Corp. (NYSE: S) as it was also rumored to be interested in a merger or network-sharing deal with T-Mobile. This may now have been trumped by AT&T.

— Dan Jones, Site Editor, Light Reading Mobile

DCITDave 12/5/2012 | 5:09:58 PM
re: AT&T to Buy T-Mobile USA for $39B

Anyone think Verizon will spring for MetroPCS or US Cellular in order to keep up?

melao2 12/5/2012 | 5:09:57 PM
re: AT&T to Buy T-Mobile USA for $39B

The same phenomenon is happening in Brazil, more and more mergers among the operators, and I guess it will happen in most of the countries.

How many competitors does the market supports? How many mergers will we have in the telecom area?

For example, TIM and Telefonica have been talking for ages about a merger. America Moviles, already has a big chunk of operations in Central and South America.

Are we observing that the previous national monopolies will become international oligopolies? Or is it back to Ma Bell all over again?



joset01 12/5/2012 | 5:09:57 PM
re: AT&T to Buy T-Mobile USA for $39B

Sprint is the logical choice. Assuming this merger actually gets approval.

pramsay 12/5/2012 | 5:09:55 PM
re: AT&T to Buy T-Mobile USA for $39B

Why would Sprint be the logical choice?  The networks are completely incompatable and there would be little that Sprint could do to bring the three networks together to function as one.  When Sprint bought out Nextel, it nearly put both companies under due to the incompatable networks and the customer service that Sprint brought to the table.

With that said, AT&T would be the logical choice since both companies use the GSM network, and would have a much easier time bringing all of the subscribers under one umbrella, not to mention that it would increase the network footprint of both companies.

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