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AT&T is Buying T-Mobile for $39 Billion

Posted by on March 20, 2011 at 7:05 pm

You might have heard the rumors last week that Sprint was looking to buy T-Mobile from Deutsche Telekom which would really help Sprint because they are losing customers left and right. Well this is official, of course it still has to pass through the government but AT&T offered to buy T-Mobile USA for $25 billion in cash and $14 billion in stock.

This deal would make AT&T the largest wireless carrier in the United States bumping Verizon Wireless to second place. AT&T says with this deal they will be able to expand LTE coverage to 95% of the population or 294 million people. This is also supposed to help the growth that AT&T can’t really handle and they will spend $8 billion over the next seven years to grow the infrastructure.

The two companies will still operate separately until the deal is approved by the government. So 12+ months. Some people think this will make prices go up but AT&T says that in the past when there have been mergers like this (AT&T/Cingular, Sprint/Nextel) that prices have actually gone down. Here are some the questions they expected with answers:

1. How will this transaction benefit U.S. wireless consumers?

  • AT&T can commit to extending its 4G LTE build to 46.5 million additional people, including rural and smaller communities – roughly equivalent to the combined populations of the states of New York and Texas.
  • Expands network capacity and output available to customers, which will not only improve service but ensure continued competitive pricing and innovation. 4G LTE service will be available to T-Mobile’s 34 million subscribers, a win for consumers.
  • Expanding AT&T’s 4G LTE network will help the U.S. continue to lead the world in building and benefiting from next-generation mobile broadband capabilities, deploying infrastructure critical to attracting investment, growing America’s economy and creating new jobs.

2. What impact will this transaction have on pricing for wireless customers?

  • The U.S. is one of the most competitive wireless markets in the world.
  • And this is an enormously efficiency-enhancing merger due to the complementary spectrum, network and operations of both parties.
  • From 1999-2009, a period during which there were several sizeable wireless mergers also designed to gain efficiencies and synergies, prices dropped by 50% while services, features and functionality expanded.

3. Will the availability of plans change?

  • Until the completion of the transaction, the companies will continue to operate independently. Availability of voice and data plans for AT&T and T-Mobile customers will be up to each company. Once the transaction closes, AT&T expects to share more specific details with its customers.
  • In prior transactions, AT&T generally allowed customers to keep their current rate plans for some period of time and allowed them to choose a comparable device at no charge if their device was not compatible with the network.

4. I am a T-Mobile customer. What will change for me?

  • This transaction itself will not have any impact on existing customers because until all regulatory approvals are obtained, the companies must continue to operate independently. We anticipate the transaction will take approximately 12 months to close.
  • Once the transaction closes, T-Mobile customers will gain access to the benefits of AT&T’s network:
    • The nation’s fastest mobile broadband network getting faster with 4G speeds.
    • Access to an ever-expanding 4G LTE network
    • Broad portfolio of popular devices, including smartphones and tablets
    • Expanded free mobile-to-mobile calling (more than 100 million customers)
    • Access to 24,000+ Wi-Fi hotspots at no charge as a smartphone customer

5. I am an AT&T customer. What will change for me?
This transaction itself will not have any impact on existing customers because until all regulatory approvals are obtained, the companies must continue to operate independently. We anticipate the transaction will take approximately 12 months to close.

I think this is a pretty good deal merging the GSM carriers into a super carrier because if Sprint bought them then one side would have to get new phones, and that would blow. You can read more about this on MobilizeEverything.com, they have graphics showing how the coverage will be extended and charts and other fun stuff.

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