The merger, which would combine the No. 2 and No. 4 U.S. wireless carriers, will dramatically increase AT&T's subscriber base from 95.5 million to 129.2 million. It also will significantly broaden AT&T's network footprint. The company said the transaction will allow it to deploy LTE to 95% of the U.S. population, or approximately 294 million people, reaching an additional 46.5 million people than it could with its current LTE deployment plans.
As part of the deal, AT&T will pay $25 billion in cash and the rest in stock. In return, Deutsche Telekom will receive an equity stake in AT&T that would give it an ownership interest of approximately 8%. In addition, a Deutsche Telekom representative will join the AT&T board of directors.
AT&T is clearly hoping to convince regulators that this merger is a good move for the wireless industry at a time when the FCC is already questioning the competitiveness of the U.S. mobile business. In its press release announcing the merger, AT&T said the acquisition will result in additional spectrum, increased cell-tower density, and broader network infrastructure, adding that this improvement will result in better voice quality. Ever since AT&T launched the iPhone in 2006, it has been criticized for the quality of its network and its ability to handle the increased data demands brought about by the iPhone.
AT&T also said the merger will increase its infrastructure investment in the U.S. by more than $8 billion over seven years.
Though AT&T did not disclose possible job cuts related to the action, the carrier said it plans to retain a strong employee and operations base in T-Mobile's hometown of Seattle.
AT&T's acquisition of T-Mobile is a bit of a surprise, considering that recent market noise pegged Sprint Nextel
AT&T's proposed purchase of T-Mobile is the latest in a string of gigantic telecom mergers. Verizon
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