AT&T (NYSE: T) announced plans to fork over $39 billion to purchase Deutsche Telekom's T-Mobile (XETRA: DTE.DE) USA. Verizon (NYSE: VZ) Wireless is currently the U.S. mobile market leader, but if the purchase goes through, AT&T will surpass Verizon and snatch the No. 1 spot.

Verizon currently possesses 34.5% of the market compared with AT&T's 32%. The acquisition would bring AT&T's share up to 42%.

However, before the deal is allowed to take place, it no doubt will face intense regulatory scrutiny. With fewer mobile providers, anti-trust officials are concerned that the deal will drive up the price of wireless services for consumers, according to the article.

Verizon and AT&T will collectively control over three quarters of the wireless services market, creating a duopoly of sorts. This leaves smaller providers like Sprint Nextel (NYSE: S) or MetroPCS (NYSE: PCS) blubbering in attempt to figure out their next steps.

Not surprisingly, Deutsche Telecom AG shares rose more than 13% on news of the acquisition, while AT&T shares rose to a lesser degree of near 2%.

Investors will face some interesting opportunities in the coming weeks and months. The most obvious item to consider is the fact that perhaps the deal will not clear regulatory oversight, and the plan will fizzle. Considering the stock price increase of both Deutsche Telecom AG and AT&T, both shares may fall enough to provide a nice profit for those betting against regulatory approval. Speculators may wish to make the bet now and use put options to state their opinion, or simply sell the shares short.

However, another consideration to keep in mind is the possibility of the deal being approved and AT&T indeed surpassing Verizon Wireless in market control. This would likely be good news for AT&T for several reasons. AT&T was unsurprisingly upgraded by several top-tier research firms today. Most importantly, Verizon Wireless has commented that it will not likely seek to acquire the third largest provider, Sprint Nextel, due specifically to anti-trust concerns. This would suggest that AT&T would become and likely remain No. 1 in the wireless services market for the long term. If investors believe the acquisition will be approved, purchasing shares of AT&T, or call options (more specifically, LEAPS), may provide investors with a nice return over the next few years.

The final aspect that investors may wish to consider is the prospects for the smaller companies in the market. Comparing the last five years, AT&T and Verizon outperform both Sprint Nextel and MetroPCS. However, in the last two years, Sprint Nextel's return has surpassed the two superpowers. In the past year, MetroPCS has grown tremendously and has dwarfed all three in return. Perhaps AT&T will again provide shareholders with the growth they expect. The big question is, will the acquisition be enough to reverse the trend and allow AT&T to achieve higher returns for its shareholders than the smaller companies?

Benzinga

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