Monday, March 21, 2011
AT&T has announced that it will purchase T-Mobile for US$39 billion. The move will make AT&T the largest cellular carrier in the United States. It was announced Sunday by both Deutsche Telekom, the owner of T-Mobile, and by AT&T. According to industry analysts, the deal was made to allow the two companies to compete with Verizon Wireless. Earlier in the week, T-Mobile employees hinted at a possible merger with Sprint, another cellular company. In the proposed deal, Deutsche Telekom will receive a board seat and a 8% stake in the merged company.
The merger is expected to complete after government regulatory departments approve it due to competition law. The sale would reduce the number of significant carriers in the US from four to three and is expected to close fully in about one year. In December 2010, T-Mobile reported a base of 34 million customers, AT&T had 95 million, and Verizon reported 94 million. A conference call on the deal is scheduled for EDT 8 AM Monday.
The move will to allow up to 95% of United States citizens access to a 4G LTE cellular network. Both AT&T and T-Mobile use the GSM standard (short for Global System for Mobile Communications) for their networks. Additionally, the popular iPhone smartphone from Apple Inc. will eventually arrive for T-Mobile subscribers; Verizon became the second carrier to sell the iPhone in the US February.
AT&T Chairman and CEO Randall Stephenson released a statement and said, “This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future. 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 response to the move, Gartner analyst Phillip Redman said, “Bigger is better in a commodity game. Four providers were too many. This may help Sprint as it becomes the standalone low-cost provider, and it makes more sense than a Sprint-T-Mobile deal.”