AT&T Buys T-Mobile
Sunday, March 20, 2011 at 7:12PM AT&T Inc. said Sunday it will buy T-Mobile USA from Deutsche Telekom AG in a cash-and-stock deal valued at $39 billion that would make it the largest cellphone company in the U.S.
The deal would reduce the number of wireless carriers with national coverage from four to three, and is sure to face close regulatory scrutiny. It also removes a potential partner for Sprint Nextel Corp., the struggling No. 3 carrier, which had been in talks to combine with T-Mobile USA.
AT&T is now the country's second-largest wireless carrier and T-Mobile USA is the fourth largest. The acquisition would give AT&T 129 million subscribers, vaulting it past Verizon Wireless' 102 million. The combined company would serve about 43 percent of U.S. cellphones.
For T-Mobile USA's 33.7 million subscribers, the news doesn't immediately change anything. Because of the long regulatory process, AT&T expects the acquisition to take a year to close. But when and if it closes, T-Mobile USA customers would get access to AT&T's phone line-up, including the iPhone.
With this transaction, AT&T commits to a significant expansion of robust 4G LTE (Long Term Evolution) deployment to 95 percent of the U.S. population to reach an additional 46.5 million Americans beyond current plans – including rural communities and small towns. This helps achieve the Federal Communications Commission (FCC) and President Obama’s goals to connect “every part of America to the digital age.” T-Mobile USA does not have a clear path to delivering LTE.
“This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future,” said Randall Stephenson, AT&T Chairman and CEO. “It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people. Mobile broadband networks drive economic opportunity everywhere, and they enable the expanding high-tech ecosystem that includes device makers, cloud and content providers, app developers, customers, and more. During the past few years, America’s high-tech industry has delivered innovation at unprecedented speed, and this combination will accelerate its continued growth.”
In a press release, Deutsche Telekom Chairman and CEO René Obermann chimed in.
As we evaluated options for the T-Mobile USA business, two questions were foremost in our minds: what’s best for Deutsche Telekom and what’s best for T-Mobile USA? The transaction with AT&T is the answer to both questions.
The sale of T-Mobile USA to AT&T is the ideal strategic path for Deutsche Telekom as it provides us with the flexibility to invest in our networks across Europe while simultaneously retaining our exposure to the dynamic U.S. wireless industry through an approximately 8% equity stake in AT&T. We believe the transaction values T-Mobile USA appropriately and is in the best interests of our shareholders.
This sale is not only in the best interests of Deutsche Telekom, but is the best and most logical way forward for T-Mobile USA customers. Most importantly, both AT&T and T-Mobile use the same network technology, which will make the integration seamless and produce significant benefits for customers. By itself, T-Mobile USA does not have a clear path to delivering LTE. With the combined spectrum, cell sites and scale, T-Mobile customers will see a tangible improvement in service and fully benefit from the rapid evolution of LTE and the broader mobile ecosystem of innovation.
