Business

AT&T to Buy T-Mobile USA for $39 billion

NEW YORK (AP) — AT&T Inc. said Sunday it will buy T-Mobile USA from Deutsche Telekom AG in a cash-and-stock deal valued at $39 billion that would make it the largest cellphone company in the U.S.

AT&T to Buy T Mobile USA for $39 billion

The deal would reduce the number of wireless carriers with national coverage from four to three, and is sure to face close regulatory scrutiny. It also removes a potential partner for Sprint Nextel Corp., the struggling No. 3 carrier, which had been in talks to combine with T-Mobile USA, according to Wall Street Journal reports.

AT&T is now the country’s second-largest wireless carrier and T-Mobile USA is the fourth largest. The acquisition would give AT&T 129 million subscribers, vaulting it past Verizon Wireless to make it the largest U.S. cellphone company.

For T-Mobile USA’s 33.7 million subscribers, the news doesn’t immediately change anything. Because of the long regulatory process, AT&T expects the acquisition to take a year to close. But when and if it closes, T-Mobile USA customers would get access to AT&T’s phone line-up, including the iPhone.

The effect of reduced competition in the cellphone industry is harder to fathom. Public interest group Public Knowledge said that eliminating one of the four national phone carriers would be “unthinkable.”

“We know the results of arrangements like this – higher prices, fewer choices, less innovation,” said Public Knowledge president Gigi Sohn, in a statement.

T-Mobile has relatively cheap service plans compared with AT&T, particularly when comparing the kind that don’t come with two-year contract. AT&T CEO Randall Stephenson said one of the goals of the acquisition will be to move T-Mobile customers to smart phones, which have higher monthly fees. AT&T “will look hard” at keeping T-Mobile’s no-contract plans, he said.

AT&T will pay about $25 billion in cash to Deutsche Telekom, Germany’s largest phone company, and stock that is equivalent to an 8 percent stake in AT&T. Deutsche Telekom will get one seat on AT&T’s board.

Like Sprint, T-Mobile has been struggling to compete with much larger rivals AT&T and Verizon Wireless, and its revenue has been largely flat for three years. Bellevue, Wash.-based T-Mobile USA’s subscriber count has stalled at just under 34 million, though it posts consistent profits.

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 a U.S. partner.

To assuage regulatory concerns, AT&T said in a statement Sunday that it would spend more to expand ultrafast wireless broadband into rural areas. 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, while avoiding construction of additional towers.

The deal has been approved by the boards of both companies. 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

Comments (42)

  • AcidicReverie1
    Posted on March 21, 2011 at 11:05am

    This will be allowed to happen because it makes sense. the less companies there are the more control that can be obtained.

    Report Post »  
  • rdk
    Posted on March 21, 2011 at 9:00am

    AT&T is pretty successful at money grubbing. Look for cell phone rates to go up.

    Report Post »  
  • geonj
    Posted on March 21, 2011 at 8:39am

    i support capitalism, but as we have seen with banks, the more these mergers go through, the fewer choices we end up having.

    Report Post » geonj  
  • AgentStott
    Posted on March 21, 2011 at 7:51am

    Not again! This is just like my bank. Every time it gets worse. Good thing I keep all of my paper work. I suggest all of you T-Mobile customers do the same. That way you can flash it when AT&T tries to dick with you. I love T-Mobile and hear nothing but problems with AT&T. To bad I just signed a 2 year contract.

    Report Post »  
  • mrsmileyface
    Posted on March 21, 2011 at 7:30am

    WONDERFUL!!! now ATT is gonna be an even bigger worthless dropped call overpriced network. Congratulations everyone involved! Money well spent!

    Report Post » mrsmileyface  
  • wkan
    Posted on March 21, 2011 at 5:07am

    Tmobile lies about its coverage then when you complain they say you have a contract F off….Now they are joined with a company that has a history of slamming in class action suits. In fact I have been a victim of both companies. The bad just got worse.

    Report Post »  
  • Haroldm1
    Posted on March 20, 2011 at 11:22pm

    It is interesting that the night of Divestiture of the Regional Operating Companies from AT&T, we (me being an employee of Southwestern Bell) had a conversation about which ROC would do the best. My opinion at the time was that Southwestern Bell would absorb the rest them and it would go back to being the same Large Company as before.
    The folks at AT&T called us Loopies, since we had the local loop, as it was called. We took care of the outside plant consisting of the Central Office where the service started, all the way to the customers house, where a Network Interface was installed to separate out the “outside” from the “inside”. The customer now owned the wiring inside the house and could buy their own phones, or rent them.
    For a while there, you could find refurbished desk and wall phones for next to nothing. Keep in mind that these were the phones that were designed and built to last a lifetime. Before Divestiture, it was an advantage to have a phone that wasn’t disposable, since the phone company was responsible for it.
    When I retired in 2002, SWBT had acquired a large portion of the ROC’s. I can’t say that it was a good decision to acquire a ROC that drained all the resources that was so desperately needed in the Company that was the best of all of them.
    BTW, until that happened, SWBT was rated Number 1 of all the Operating Companies. In the end, the name was changed to AT&T, because, in my opinion, AT&T had a better name than SWBT. Also, the Divestiture wasn’t about poor service, it was about a company that applied for a license to provide Long Distance Service along a High Profit Route.

    Report Post »  
  • shorthanded12
    Posted on March 20, 2011 at 9:08pm

    Need not to worry Im sure some socialist pig in Government Like Rep J.J JR (D-IL) will be pushing the idea of more free gov-cell phones with your 200 minutes per month.

    Report Post »  
  • 2smart
    Posted on March 20, 2011 at 8:45pm

    I have had AT & T for about 13 years. First it was Southwestern bell Wireless, then Cingular and now the big 800 lb gorilla AT & T. But, that said I have noticed in central Texas and pass into T-Mobile networks area the number of dropped calls increases or the network just isn’t there. Must be the consequences of having cheap service plans. Cheap service is usually coupled with cheap equipment and it shows from my experience which is tremendous. I have worked for one of the largest network producers for over 14 years and am quite familiar with the inside of the nations telephone network. So heres hoping that AT & T replaces their network equipment with products from Northern Telecom, Fujitsu, or Alcatel.

    Report Post » 2smart  
  • clinicalminded
    Posted on March 20, 2011 at 8:12pm

    Crappy + crappy = twice as much crap.

    Report Post »  
  • kenny1960
    Posted on March 20, 2011 at 7:29pm

    Well if history tells us anything it will be this: Prices will go through the roof and customer care will go down the drain. ATT is very arrogant and I hate the fact that if you want service with ATT and do not have a unblemished credit score they want a extremely high deposit before they will give you service. I will stick with Boost Mobile, No contracts and they could care less about my credit score. I pay my bill on time or my phone gets cutoff, Simple as that

    Report Post » kenny1960  
  • Grandmadar
    Posted on March 20, 2011 at 7:05pm

    Hmmm. this is interesting. When AT&T started to buy Centennial Wireless it was a long regulatory process. In the end, the only way they were allowed to buy Centennial is if they sold off portions of Centennial. Verizon bought the Louisiana portion and a long-named company with Shinook in it bought the other part. This was the only way they were allowed to buy Centennial. So why, I ask will they be allowed to buy T-Mobile????

    Someone said it in this section and they are correct… a phone company along with a car company and a Bank! Our elected officials better get on the ball and start enforcing our Constitution. It is being trampled on everyday.

    Report Post »  
  • termase
    Posted on March 20, 2011 at 6:58pm

    AT&T, watch out, I smell another breakup coming.

    Report Post » termase  
  • everydaysuitcoat
    Posted on March 20, 2011 at 6:38pm

    “Higher prices, Fewer choices, Less innovation”…………….Try: Larger customer base, Higher profits, Lower prices, Higher reinvestment, More innovation…..Unless, of course, the government gets involved. Or AT&T corporate doesn’t know how to run a business, in which case (assuming this means higher prices) us consumers will punish them by ditching their service. It’s simple, really.

    Report Post »  
    • Ranubis
      Posted on March 20, 2011 at 6:42pm

      Agreed, this is no ones business but AT&T and their costumers.

      Report Post » Ranubis  
  • Ranubis
    Posted on March 20, 2011 at 6:35pm

    Just so you know AT&T is not the AT&T of old. It is actually SBC Communications.

    Southwestern Bell Corporation was founded in 1983 as a Regional Bell Operating Company following the break-up of the original AT&T as a result of the United States v. AT&T antitrust suit. The company changed its name in 1995 to SBC Communications Inc. and again in 2005 to AT&T Inc. after it purchased its former parent company, AT&T Corporation. The newly merged company took on the iconic AT&T logo and T stock-trading symbol (for “telephone”).

    Report Post » Ranubis  
    • Haroldm1
      Posted on March 20, 2011 at 11:28pm

      You are correct..I worked for SWBT up until 2002 when I retired. The name change to AT&T came after that.

      Report Post »  
    • towerguy
      Posted on March 22, 2011 at 11:46am

      Ranubis: The current AT&T consists of MULTIPLE former RBOCs (regional bell operating companies) and is larger in size and cope than the old Ma Bell ever was. It has consistently merged competition out of the market rather than compete head to head (do I hear Judge Greene somewhere bemoaning this?). I‘m not saying that the company doesn’t have a right to do whatever it wants; it can, but we need to accurately depict what it means for consumers. I’m predicting now that the buyout will have so many conditions from the FCC and Justice to happen anyway.

      Report Post » towerguy  
  • Borderlegion
    Posted on March 20, 2011 at 6:31pm

    All AT&T is going to do is expand on their horrible service. They don’t have the bandwidth enough to support the current Iphone users, add another 24 million to that. Prediction: AT&T becomes the largest/worst provider, your calls will continue to drop and the prices will go up.

    Report Post »  
  • shorthanded12
    Posted on March 20, 2011 at 6:25pm

    The Feds years ago broke up MAA – Bell ie Monopoly….Sounds like another 3000 page bill from congress to rain in AT&T.

    Next week AT&T will announce layoffs in the U.S. than raising ex T-Moble customers rates. Customer service reps will be in India. Hello this is AT&T customer service My name is Brian known dam well his real name is PATEL or Ackmed.

    Where have I seen this story play out before Oh yea it was T-Moble when they bought out SUN-COM.

    Report Post »  
  • slhaynes
    Posted on March 20, 2011 at 6:22pm

    Not at all happy about this news. I like my T-Mobile pre-paid plan just the way it is.

    Report Post »  
  • orlandojon
    Posted on March 20, 2011 at 6:17pm

    Tried ATT and hated them, have been a loyal T-Mobile customer for 10 years. This is not good news…

    Report Post »  
  • Slowman101
    Posted on March 20, 2011 at 6:11pm

    Figures. I am a T-mobile customer, and have been for some time. I pay enough for me and my wifes phones. I think it’s time they put a cap on cell phone bills. I know I don’t care for AT&T at all. And, AT&T already states one of their objectives is to PUSH people into the more expensive iphones which I am SURE have a MORE expensive service plan/contract. No thanks. If that happens, AT&T can lube it up, and shove it up! I’ll either do without or go to a straight talk phone from Walmart. Greed! Greed! GREED!

    Report Post »  
    • uncivilized
      Posted on March 20, 2011 at 6:21pm

      I had Cingular back before they merged with AT&T – dreadful service. Then we went with Suncom before THEY merged with T-Mobile – much better. Never had a bit of problem with T-Mobile…and I’m not about to change over. They can cancel our contract, I’m going with prepaid.

      Report Post » uncivilized  
    • everydaysuitcoat
      Posted on March 20, 2011 at 6:28pm

      Cap on cell phone bills??? No thanks, FDR proved that price fixing doesn’t work. AT&T PUSHING customers into more expensive plans??? I don’t think that would be legal for them to force people but it will be interesting to see how this plays out. But greed??? You’re saying greed is a horrible thing? What do you think were Steve Job’s motives when he invented the iphone and ipod and all of that? It wasn’t for the collective good.

      Report Post »  
    • GODSAMERICA
      Posted on March 20, 2011 at 8:45pm

      @Slowman101
      I am a T-Mobile customer as well (have been ever since 2 or 3 name changes ago) and I’m not impressed with AT&T. If this happens then I will see what happens. If they start trying to give me the “shaft” then I will check into something else for sure. I figure that especially if AT&T does this, Verizon will be fighting to get back on top and they may come up with some outstanding deals to try and get the upper hand again. If they do this then I may go with Verizon, if not I may be checking out the Trac Phones or whatever.

      Report Post » GODSAMERICA  
  • drbage
    Posted on March 20, 2011 at 6:07pm

    This sounds like they are getting too big and might start earning that much progressively demeaned word “profit.” Waxy Waxman might call them before Congress for an Inquisition and start a movement to break them up. Having seen the result of the government breaking up good ol’ Ma Bell, the only ones who will suffer are we, the consumers.

    Report Post »  
  • mattwakulik
    Posted on March 20, 2011 at 5:56pm

    i agree with psyhosis. they all stink trac phone is the way!

    Report Post » mattwakulik  
    • chips1
      Posted on March 20, 2011 at 6:54pm

      They are all crooks. Ben Lauden gets good reception in a cave and I can’t get 2 bars in America. Bet he gets a special deal. By the way, Why don’t we find out where they send his bill?

      Report Post »  
    • Showtime
      Posted on March 20, 2011 at 7:19pm

      Chips –
      That was funny! Osama gets good reception in a cave and I can’t get two bars in America!

      I don’t need a cell phone any longer. Just wish I could find the charging cord so I could get some old numbers off of it.

      Report Post » Showtime  
  • Psychosis
    Posted on March 20, 2011 at 5:53pm

    who cares……………anyone in their right mind should have dumped any of the big phone companies already, and use non contract phone services anyways

    i use a trac phone or the equivalent unlimited service nationwide unlimited web etc etc for 30 a month

    Report Post » Psychosis  
    • CatB
      Posted on March 20, 2011 at 5:58pm

      I have a prepaid trac phone with double minutes for life .. if it works out in Michigan as it has in Florida .. and on the trip .. I will be dropping .. haven’t had a contract in a long time .. I know their tricks I change NOTHING!

      Report Post »  
    • DTOM_Jericho
      Posted on March 20, 2011 at 9:35pm

      “who cares……………anyone in their right mind should have … ”

      Anyone in their right mind should have bought whatever they wanted with their money. Welcome to what’s called a free market. And congratulations on being the first trac phone fanboi?

      Report Post » DTOM_Jericho (Creator vindicator)  
  • American Soldier (Separated)
    Posted on March 20, 2011 at 5:45pm

    After all those T-mobile vs AT&T commercials, they end up merging! Ironic. I’m with AT&T, I don’t mind the prices. I’m grandfather claused into unlimited data and I love my iPhone. I’ve been without a contract for a long time and love having the leverage over them for that!

    Report Post » American Soldier (Separated)  
    • RIGHTNOTLEFT
      Posted on March 20, 2011 at 5:53pm

      I hear that Obama would just love a phone company to go with his car company and banks.

      Report Post »  
    • CatB
      Posted on March 20, 2011 at 5:56pm

      Well … AT&T I heard had an over crowded network .. so is this going to help or hurt? .. I know I get dropped calls .. if it gets worse I will go totally with prepaid plan I am testing out … works in Florida .. if it works in Michigan .. bye bye AT&T.

      Report Post »  
    • cheezwhiz
      Posted on March 20, 2011 at 5:57pm

      Baby bells coalescing …..

      Report Post » cheezwhiz  
    • sissykatz
      Posted on March 20, 2011 at 6:03pm

      I‘m sure I will be affected I am with T Mobile I have been with the same carrier since I bought my first phone in early ’90s I think. My carriers have been bought off and changed names but I have never changed. I like the service I get with T mobile I don’t have the smart phone since I am home now more than out.I’m sure ours rates will go up.

      Report Post »  
    • Secret Squirrel
      Posted on March 20, 2011 at 8:56pm

      ………
      Tell me again why we broke up AT&T a while back because it was too big and
      didn‘t care about it’s customers?
      Now it‘s okay to be too big and don’t care about your customers?
      America is doomed.

      Report Post » Secret Squirrel  
    • SlimnRanger
      Posted on March 20, 2011 at 9:34pm

      i am an ATT customer and since they are buying out T-Mobile does this mean their towers as well,the way it is now i have to be outdoors to talk on my cell but friends with t-Mobile got service here in the house

      Report Post »  
    • LiveNation
      Posted on March 20, 2011 at 10:14pm

      t-Mobile has a feature called UMA that allows call to be routed over a wifi network. I have absolutley no signal at my home, but with UMA it’s like I have a private tower. No dropped calls, clear signal. If AT&T takes that away I’m gone.

      Report Post »  
    • towerguy
      Posted on March 22, 2011 at 11:38am

      American Soldier: If you’re not under contract, you’re not “grandfathered” into anything. When your contract expires and you go month to month, they can change anything at any time. I had an “unlimited plan” with a US carrier and they unilaterally changed it to 5 GB per month. Anything over that costs something.

      I’m glad you like your service, but hold on to your wallet. This whole thing is bad for consumers.

      Report Post » towerguy  

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