AT&T March 20 agreed to purchase T-Mobile USA from Deutsche Telekom AG, paying $39 billion in cash and stock for the struggling phone carrier to help accelerate its 4G LTE (Long-Term Evolution) network plans.
AT&T will pay Deutsche Telekom $25 billion, with the remainder to be paid in AT&T stock for T-Mobile in a deal both companies’ boards approve and expect to close in 12 months. Deutsche Telekom will take an 8 percent equity stake in AT&T, according to the deal terms.
The blockbuster deal makes sense on a number of levels, starting with the fact that both run GSM technology, an important characteristic for network compatibility.
T-Mobile has 33.7 million mobile subscribers, but finds itself struggling to compete with top carriers Verizon Wireless and AT&T, which serve over 94.1 million and 95.5 million subscribers, respectively.
The buyout is a bailout for Deutsche Telekom’s wireless unit, but it would stand to make AT&T easily the largest U.S. carrier if the deal passes regulatory muster and is consummated.
Perhaps more importantly, it would help AT&T ramp up its 4G LTE network plans, which have yet to come to fruition at a time when Verizon, Sprint and T-Mobile all hitched their wagons to the speedy next-generation wireless technology.
While Sprint and T-Mobile beat both larger carriers to 4G, Verizon is now serving 4G in almost 40 U.S. markets, with plans to reach more than 100 markets by the end of 2011. The carrier began selling its first 4G phone, the HTC Thunderbolt, March 17.
For more, read the eWEEK article: ATandT Buying T-Mobile for $39B to Ramp 4G.