New York – AT&T Inc., the country’s second-largest wireless carrier in the United States, on Sunday said it will buy T-Mobile USA, the fourth-largest, from Deutsche Telekom AG in a cash-and-stock deal valued at $39 billion.
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AT&T will pay about $25 billion in cash and the balance in company stock in a deal that gives Deutsche Telekom about an 8 percent equity stake in AT&T.
T-Mobile is coming off of two years of flat revenue as it struggles to compete with much larger rivals AT&T and Verizon Wireless. Bellevue, Wash.-based T-Mobile USA’s subscriber count has stalled at just under 34 million, though it posts consistent profits.
There have been reports over the last year that Deutsche Telekom has been looking at radical moves to let it get more value out of its U.S. holding, including a possible combination with Sprint Nextel Corp. or some other U.S. partner.
AT&T said in a statement Sunday the deal gives it an “optimal combination of network assets” that adds capacity sooner than any other alternative. It also said the deal will improve network quality for the customers of both companies and increase the number of cell towers by about 30 percent in some of its most populated areas.
The deal has been approved by the boards of both companies, but will likely face tough scrutiny from regulators. Dallas-based AT&T can increase its cash portion by up to $4.2 billion, with a reduction in the stock component, as long as Deutsche Telekom receives at least a 5 percent equity ownership interest in the buyer.
AT&T will finance the cash part of the deal with new debt and cash on its balance sheet and will assume no debt from T-Mobile.
does any person know whether the at&t network will improve with this transaction? ok ok ok it can’t get worse…
That’s bad for prices.
I have AT&T since 1998 and I have very few complaints!
No matter what prices will get higher, customer services worse and contracts more onerous.
This is pure antitrust, and I assure you prices will GO UP.
It wil definitely create better coverage & better service. T mobile’s service wasn’t anything to write home about, but their dead zones are not the same as AT&T’s, so the combination will definitely be an improvement. I always loved Verizon’s service, but their arrogant customer service is horrendous. I’m glad I can stay with AT&T.
I’m switching to Virgin Mobile, $25 a month and no contract.
What about virgin mobile will it be closed? This is surely going to rise prices on all networks and we r going to lose from it
It would not dawn on any of you to either read the business section of the NY Times, or any other authoratitive news outlet. How about contacting your service suppliers, if you can not or will not read a goyishka newspaper?