AT&T To Acquire T-Mobile USA

AT&T is buying T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction valued at approximately $39bn (£24bn). The agreement has been approved by the Boards of Directors of both companies. As part of the transaction, Deutsche Telekom will receive an equity stake in AT&T that, based on the terms of the agreement, would give it a stake of approximately 8 per cent in AT&T.

AT&T says the acquisition provides “an optimal combination of network assets to add capacity sooner than any alternative, and… an opportunity to improve network quality in the near term for both companies’ customers. In addition, it provides a fast, efficient and certain solution to the impending exhaustion of wireless spectrum in some markets, which limits both companies’ ability to meet the ongoing explosive demand for mobile broadband.”

As part of the deal, AT&T is committing to a significant expansion of 4G LTE (Long Term Evolution) deployment to 95 per cent of the US population, to reach an additional 46.5m Americans beyond current plans, including rural communities and small towns. It notes that T-Mobile USA “does not have a clear path to delivering LTE”.

“This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future,” says AT&T chairman and CEO, Randall Stephenson. “It will improve network quality, and it will bring advanced LTE capabilities to more than 294m people.

“This transaction delivers significant customer, shareowner and public benefits that are available at this level only from the combination of these two companies with complementary network technologies, spectrum positions and operations. We are confident in our ability to execute a seamless integration, and with additional spectrum and network capabilities, we can better meet our customers’ current demands, build for the future, and help achieve the President’s goals for a high-speed, wirelessly connected America.”

The deal gives AT&T access to much-needed additional spectrum. AT&T’s mobile data traffic has grown 8,000 per cent over the past four years and by 2015 it is expected to be eight to 10 times what it was in 2010. When the deal closes, AT&T will gain cell sites equivalent to what would have taken around five years to build without the transaction, and double that in some markets. The combination will increase AT&T’s network density by approximately 30 per cent in some of its most populated areas, while avoiding the need to construct additional cell towers.