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AT&T to Acquire T-Mobile USA for $39 Billion from Deutsche Telekom!

21 March 2011 10,054 views 2 Comments

In a stunning move, AT&T announced to acquire T-Mobile USA from Deutsche Telekom AG (DTE) in a cash-and-stock deal valued at about $39 billion. Both companies have entered into a ‘definitive agreement’ for the acquisition and this agreement has been approved by the Boards of Directors of both companies. The deal is expected to take 12 months to complete, pending all of the usual paperwork and regulatory approval. Currently AT&T is the second-largest mobile operator in the United States, and T-Mobile USA is the fourth largest. This deal will make AT&T the largest wireless provider in the United States. The acquisition will give AT&T 34 million new subscribers and elevate its annual wireless revenues to around $80 billion from $58.5 billion in 2010.

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According to data compiled by Bloomberg, this is the largest deal for AT&T since the acquisition of BellSouth Corp. in 2006 for about $83 billion. It’s the largest takeover to be announced in the wireless industry since 2004. AT&T will pay $25 billion in cash and the rest in stock. Deutsche Telekom will receive at least a 5 percent equity stake in AT&T and a seat in AT&T’s Board of Directors.

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“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.”

Randall Stephenson continued, “This transaction delivers significant customer, shareowner and public benefits that are available at this level only from the combination of these two companies with complementary network technologies, spectrum positions and operations. We are confident in our ability to execute a seamless integration, and with additional spectrum and network capabilities, we can better meet our customers’ current demands, build for the future and help achieve the President’s goals for a high-speed, wirelessly connected America.”

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Deutsche Telekom Chairman and CEO René Obermann said, “After evaluating strategic options for T-Mobile USA, I am confident that AT&T is the best partner for our customers, shareholders and the mobile broadband ecosystem. Our common network technology makes this a logical combination and provides an efficient path to gaining the spectrum and network assets needed to provide T-Mobile customers with 4G LTE and the best devices. Also, the transaction returns significant value to Deutsche Telekom shareholders and allows us to retain exposure to the U.S. market.”

This deal will directly benefit an additional 46.5 million customers, who will have access to AT&T’s latest 4G LTE technology (Long Term Evolution). T-Mobile has HSPA+, which delivers speed similar to 4G, but it’s not a real 4G technology and T-Mobile hasn’t announced any plans for network expansion beyond HSPA+. T-Mobile has posted a Q&A Release on its website answering some of the questions current T-Mobile customers may have.

So what’s your take on this acquisition? Share your views with us in the comments section below.


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