SAN FRANCISCO (KCBS) – AT&T has announced that they have reached an agreement to acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction for approximately $39 billion.
“This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future,” said AT&T Chairman and CEO Randall Stephenson. “It will improve network quality, and it will bring advanced Long Term Evolution capabilities to more than 294 million people.”
By acquiring T-Mobile, it would help AT&T to commit to a significant expansion of 4G LTE deployment to 95 percent of the U.S. population, as T-Mobile does not have a clear path to deliver LTE.
The deal, approved by the Board of Directors of both companies, would allow Deutsche Telekom to receive an equity stake in AT&T. The purchase price will include a cash payment of $25 billion with the balance to be paid using AT&T common stock.
KCBS Technology Analyst Larry Magid:
KCBS Technology Analyst Larry Magid said the merger will be relatively smooth from a technology standpoint, as both AT&T and T-Mobile use GSM (Global System for Mobile communications) technology.
He said the deal with help AT&T because it is an instant upgrade to their network. But he’s not sure if it will be positive for T-Mobile users, who could see a more crowded network and higher prices.
The acquisition is still subject to regulatory approvals, a reverse breakup fee in certain circumstances and customary regulatory and other closing conditions. The transaction is expected to close in approximately 12 months.
(© 2011 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)