AT&T to Buy T-Mobile for $39 Billion

AT&T announced today that it intends to buy T-Mobile USA from Deutsche Telekom AG for $39 billion in cash and stock ($25 billion cash). This is a move that would create the nation's largest wireless carrier and shift the competitive landscape of the U.S. industry. By combining the second and fourth largest U.S. mobile carriers, AT&T is showing no fear towards U.S. regulators who are sure to scrutinize what will be the largest merger deal of 2011 in this sector.

One down side is that T-Mobile has long been an antagonist to both AT&T, and the nation's largest carrier, Verizon, offering low prices that kept pressure on the entire industry to keep overall prices down. In the merger, the two carriers (AT&T & T-Mobile) would be able to make an estimated $40 billion in cost cuts, likely resulting in the losses of thousands of jobs. Currently, AT&T employs 267,000 people, whilst T-Mobile employs 29,000.

AT&T intends to retire the T-Mobile name in the U.S., though Deutsche Telekom will continue to use it in it's operations in Europe. The boards of both companies have already approved the deal.

AT&T customers have long been disgruntled about the quality of the company's network, especially for voice calls made over Apple's iPhone. The merger hopes to take advantage of the fact that the two companies use the same technology, and thus will be able to expand coverage to subscribers of both companies. T-Mobile has been pummeling AT&T in a recent ad campaign claiming superiority of it's wireless coverage over AT&T's overburdened network.

AT&T has also said that the merger will allow them to offer superior broadband coverage to rural areas, a stated priority of the Obama administration, who pledged to cover over 95% of the population.

Comments

[Craig Johnson]

AT&T is terrible! They have a shitty network, and terrible customer service. They didn't get any better when they bought cingular, I don't see why they will get any better now.