US telco AT&T has announced it will acquire Deutsche Telekom subsidiary T-Mobile USA in a cash and stock transaction for $39 billion, subject to federal regulatory approval.
As a result of the acquisition, which has been approved by both boards of directors, AT&T will inherit T-Mobile USAs existing 34 million customers, becoming the largest carrier in America with approximately 130 million subscribers.
For its part, the German parent company Deutsche Telekom will obtain an 8 percent stake in AT&T.
Careful alignment
Despite rumours that rival Sprint had been in talks with T-Mobile USA about buying the company, the decision to align with AT&T makes more sense.
Because AT&T and T-Mobile USA share similar GSM and UMTS/HSPA wireless technology, the former will be able to add capacity sooner rather than later and resolve an impending issue over a shortage of wireless spectrum in one fell swoop.
"This transaction represents a major commitment to strengthen and expand critical infrastructure for our nations future," Randall Stephenson, AT&T chairman and CEO, said.
"It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people."
Immediate gains
Once the companies close the deal expected to take in the region of 12 months AT&T will "immediately gain cell sites equivalent to what would have taken on average five years to build without the transaction, and double that in some markets."
With this transaction, the iPhone will be available on three of the top 4 US carriers, leaving Sprint as the only major telco without Apples mobile on its books.
[source: AT&T]
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