Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

AT&T to acquire T-Mobile for $39 billion

By Leigh Remizowski, CNN


NEW YORK (CNN) -- AT&T will acquire T-Mobile USA from telecommunications company Deutsche Telekom for an estimated $39 billion in cash and stock, the companies said in a joint release Sunday.

The new entity would be the biggest in the US, combining AT&T's 95 million customers with T-Mobile's 34 million users for a total of 130 million subscribers.

AT&T (T, Fortune 500) said the transaction would quickly provide "the spectrum and network efficiencies necessary ... to address impending spectrum exhaust in key markets" due to the exponential growth of traffic on its network.

The telecom giant added that it expects to gain enough cell towers through the deal to increase its network density by 30%.

As part of the merger, AT&T committed to expand its 4G network 1.2 million square miles, making it accessible to an additional 46.5 million Americans, mostly in rural and smaller communities, the statement said.

"This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation's future," AT&T chief executive Randall Stephenson said in a statement.

The AT&T release notes that its 4G expansion would help achieve the Federal Communications Commission and President Obama's goals to connect "every part of America to the digital age."

The $39 billion purchase will include a $25 billion cash payment; the remainder will be paid using AT&T stock. AT&T can increase the cash portion of the payment by up to $4.2 billion while cutting the stock portion.

As part of the acquisition, Deutsche Telekom will have an 8% equity stake in AT&T and a company representative will join the AT&T board of directors.

AT&T didn't directly address how the merger would affect the new company's pricing. But on the website it built to announce the deal, www.mobilizeeverything.com, it notes: "Historically, during periods when carriers combined to achieve efficiencies, U.S. wireless prices fell."

The company also cites a 2010 report from the U.S. General Accounting Office which found that the average cost of wireless services (adjusted for inflation) "declined 50 percent from 1999 to 2009, during a period which saw five major wireless mergers."

The agreement has been approved by the boards of directors at both AT&T and Deutsche Telekom, but will be subject to regulatory approval. To top of page

Index Last Change % Change
Dow 17,742.34 -9.05 -0.05%
Nasdaq 5,123.03 11.30 0.22%
S&P 500 2,106.94 -1.63 -0.08%
Treasuries 2.26 -0.01 -0.66%
Data as of 12:43pm ET
Company Price Change % Change
Facebook Inc 94.35 -2.64 -2.72%
Bank of America Corp... 18.14 -0.02 -0.08%
Ford Motor Co 15.03 -0.18 -1.18%
Apple Inc 122.36 -0.63 -0.52%
Whole Foods Market I... 36.08 -4.74 -11.62%
Data as of 12:27pm ET
Sponsors

Sections

The company's sales have taken a hit since New York City found it was overcharging customers for some products. Whole Foods is actually cutting prices though. But it can't shake its bad reputation. More

Aclima, a startup that makes environmental sensors, is hitching a ride with Google's cars to provide everyone with data about the air they breathe. More

Fast-food chains that operate in more than 30 locations nationwide are the sole target of a new rule in New York to hike their minimum wage to $15. But consumers and small business owners, as well as some employees, may be the ones to pay the price. More

You can't blame it on the economy anymore. More Millennials now have jobs, but are still living at home. More