AT&T Agrees to Buy T-Mobile for $39 Billion

Well, this came out of left field. After months of rumors that T-Mobile and Sprint were on the verge of merging into one super company, we now learn that Deutsche Telekom has agreed to sell off T-Mobile USA… to AT&T.

…wait, what?!

In a deal that many will be completely baffled by, AT&T and Deutsche Telekom announced the deal to sell T-Mobile USA to America’s largest cellular provider for a cool $39,000,000,000 (that’s billion, for those of you who are poor with numbers). Once the deal goes through, AT&T will have added a number of call sites that would have taken them five years (and who knows how much money) to build on their own, and coverage of their LTE (4G) coverage will now support an additional 46.5 million people. In exchange, Deutsche Telekom will get $39B in cash and stock, and will have a seat on AT&T’s board of directors.

So, it seems that all parties involved are happy. But one company that had been flirting with T-Mobile USA pretty hard is far from pleased:

The combination of AT&T and T-Mobile USA, if approved by the Department of Justice (DOJ) and Federal Communications Commission (FCC), would alter dramatically the structure of the communications industry. AT&T and Verizon are already by far the largest wireless providers. A combined AT&T and T-Mobile would be almost three times the size of Sprint, the third largest wireless competitor. If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies that control almost 80% of the US wireless post-paid market, as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete. The DOJ and the FCC must decide if this transaction is in the best interest of consumers and the US economy overall, and determine if innovation and robust competition would be impacted adversely and by this dramatic change in the structure of the industry.

That quote is from an official statement given by Sprint, America’s 3rd largest cellular provider.

Seeing as how both AT&T and T-Mobile operate on GSM networks, this makes sense. Of course it will take about a year for the deal to be either approved or denied by the FCC and DOJ. While the process is pending, T-Mobile USA will continue to operate as it has been, albeit with fewer iPhone bashing ads I’d assume. Once the deal goes through, it’s anybody’s guess what will happen with T-Mobile customers.

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