AT&T Wireless has made its next move in the race against Verizon for nationwide mobile phone domination: it’s acquiring fellow GSM carrier T-Mobile from Deutsche Telekom for a combination of cash and AT&T stock currently valued at $39 billion. DT will then have an 8% stake in AT&T, and AT&T will gain 33.7 million current T-Mobile USA customers.
While the boards of both companies have approved the deal, it has not yet been approved by the Federal Communications Commission.
The press release notes that for AT&T, the deal “provides an optimal combination of network assets to add capacity sooner than any alternative.” In other words: this is a quick way to acquire more customers and expand our network so we can keep up with the massive amounts of data our customers keep slurping up.
That’s what this merger is amount: the mobile broadband spectrum: combining forces will strengthen AT&T’s network in the dense urban areas where it tends to fail, and hasten the rollout of 4G data connections to more people. The key phrase here is 4G Long Term Evolution, or LTE: that’s what the companies are calling the next generation of voice and data networks that carriers are now competing to build.
We contacted AT&T to find out how this might affect consumers. A spokesman told Consumerist:
For now, each company will continue to operate independently, of course. Looking ahead, we spell out in the release a number of areas where customers stand to gain expanded coverage to 4G LTE – an additional 46.5M Americans including many in rural areas – for a total of 95% of the US population.
How will this affect competition once the companies no longer operate independently? On the merger information site, the companies are eager to point out that overall, average mobile phone bills have fallen over the last decade even after carriers have merged and acquired each other.
Is this what will happen? Will the Death Star keep T-Mobile’s generous voice and data plans? Will T-Mobile customers be able to buy iPhones? Time will tell.
Mobilize Everything [Merger information site]
AT&T to Acquire T-Mobile USA from Deutsche Telekom [Press release]