AT&T has entered in a definitive cash-and-stock agreement with Deutsche Telekom to acquire T-Mobile USA that will make AT&T the largest wireless provider in the United States. The company announced today that the board of directors from both companies have approved the acquisition which is worth a whopping $39 billion and will grant Deutsche Telekom an 8% equity stake and ownership interest in AT&T. It will also allow for a Deutsche Telekom representative to join AT&T's board of directors.
In a statement, AT&T was strong on emphasizing the importance the acquisition has on the expansion of 4G LTE. Randall Stephenson, CEO of AT&T, said that the partnership would help "improve network quality" and will assist in bringing "advanced LTE capabilities to more than 294 mllion people." René Obermann, CEO of Deutsche Telekom, underscored the importance of 4G as well and stated that after looking over several creative strategies for T-Mobile USA, AT&T is "the best partner for [their] customers." The partnership would also allow AT&T to invest over $8 billion in the United States over the next seven years in infrastructure that will benefit rural communities and small towns.
Both companies also stressed that all customers will see an improvement in service as the partnership is a definitive solution for the "impending spectrum exhaust" that mobile providers are facing.
The deal would have AT&T pay Deutsche Telekom a cash payment of at least $25 billion, which could easily fluctuate to more than $29 billion as long as Deutsche Telekom receives at least 5% equity, and is expected to close in the next 12 months with approval from regulators.
No comments were made about how the acquisition will affect customers financially if at all, but the companies did hint that the market will remain competitive.
Update: T-Mobile has posted an update on their website about what the merger means for its customers. The company says T-Mobile USA will continue to operate as an independent company until the acquisition is complete (expected in approximately 12 months). It reiterates that both companies working together can provide 95% of the United States with 4G LTE, which would be near impossible for each company respectively. T-Mobile says they will "honor all contracted plans that are entered into before the change of ownership."