AT&T Acquires T-Mobile USA, iPhone Coming to T-Mobile Users This Year?

By , Mar 20, 2011

Wow, just wow. I don’t think anyone was expecting this. Today, AT&T Mobility announced that they will be acquiring T-Mobile USA, the nation’s fourth largest carrier, from Deutsche Telekom for $39 billion.

The purchase price will include $25 billion in cash and the remaining balance in AT&T stock, subject to adjustment, according to a statement today. The acquisition would make AT&T a monopoly for GSM/EDGE/HSPA+ phones in the U.S. This deal will also bump up AT&T to the largest U.S wireless provider with 130 million subscribers, bumping down Verizon Wireless and its 90 million subscribers to second largest.

Does this mean we will finally see a T-Mobile iPhone this Summer?

Full press release below!

AT&T TO ACQUIRE T-MOBILE USA FROM DEUTSCHE TELEKOM

Provides fast, efficient and certain solution to impending spectrum exhaust challenges facing AT&T and T-Mobile USA in key markets due to explosive demand for mobile broadband

Enhances network capacity, output and quality in near term for both companies’ customers

AT&T commits to expand 4G LTE deployment to an additional 46.5 million Americans, including in rural, smaller communities, for a total of 294 million or 95% of the U.S. population

Provides 4G LTE service for T-Mobile USA’s 34 million subscribers

More than $8 billion in incremental infrastructure spend by a U.S. company over seven years, enabling nation’s high-tech industry, innovation and economic growth

Creates substantial value for AT&T shareholders through large, straightforward synergies

DALLAS, TEXAS AND BONN, GERMANY March 20, 2011— AT&T Inc. (NYSE: T) and Deutsche Telekom AG (FWB: DT) today announced that they have entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction currently valued at approximately $39 billion. The agreement has been approved by the Boards of Directors of both companies.

AT&T’s acquisition of T-Mobile USA provides an optimal combination of network assets to add capacity sooner than any alternative, and it provides 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.

With this transaction, AT&T commits to a significant expansion of robust 4G LTE (Long Term Evolution) deployment to 95 percent of the U.S. population to reach an additional 46.5 million Americans beyond current plans – including rural communities and small towns.  This helps achieve the Federal Communications Commission (FCC) and President Obama’s goals to connect “every part of America to the digital age.” 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,” said Randall Stephenson, AT&T Chairman and CEO. “It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people. Mobile broadband networks drive economic opportunity everywhere, and they enable the expanding high-tech ecosystem that includes device makers, cloud and content providers, app developers, customers, and more. During the past few years, America’s high-tech industry has delivered innovation at unprecedented speed, and this combination will accelerate its continued growth.”

Stephenson continued, “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.”

Deutsche Telekom Chairman and CEO René Obermann said, “After evaluating strategic options for T-Mobile USA, I am confident that AT&T is the best partner for our customers, shareholders and the mobile broadband ecosystem. Our common network technology makes this a logical combination and provides an efficient path to gaining the spectrum and network assets needed to provide T-Mobile customers with 4G LTE and the best devices. Also, the transaction returns significant value to Deutsche Telekom shareholders and allows us to retain exposure to the U.S. market.”

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 Deutsche Telekom an ownership interest in AT&T of approximately 8 percent. A Deutsche Telekom representative will join the AT&T Board of Directors.

Competition and Pricing

The U.S. wireless industry is one of the most fiercely competitive markets in the world and will remain so after this deal. The U.S. is one of the few countries in the world where a large majority of consumers can choose from five or more wireless providers in their local market. For example, in 18 of the top 20 U.S. local markets, there are five or more providers. Local market competition is escalating among larger carriers, low-cost carriers and several regional wireless players with nationwide service plans. This intense competition is only increasing with the build-out of new 4G networks and the emergence of new market entrants.

The competitiveness of the market has directly benefited consumers. A 2010 report from the U.S. General Accounting Office (GAO) states the overall average price (adjusted for inflation) for wireless services declined 50 percent from 1999 to 2009, during a period which saw five major wireless mergers.

Addresses wireless spectrum challenges facing AT&T, T-Mobile USA, their customers, and U.S. policymakers

This transaction quickly provides the spectrum and network efficiencies necessary for AT&T to address impending spectrum exhaust in key markets driven by the exponential growth in mobile broadband traffic on its network. AT&T’s mobile data traffic grew 8,000 percent over the past four years and by 2015 it is expected to be eight to 10 times what it was in 2010. Put another way, all of the mobile traffic volume AT&T carried during 2010 is estimated to be carried in just the first six to seven weeks of 2015. Because AT&T has led the U.S. in smartphones, tablets and e-readers – and as a result, mobile broadband – it requires additional spectrum before new spectrum will become available.  In the long term, the entire industry will need additional spectrum to address the explosive growth in demand for mobile broadband.

Improves service quality for U.S. wireless customers

AT&T and T-Mobile USA customers will see service improvements – including improved voice quality – as a result of additional spectrum, increased cell tower density and broader network infrastructure. At closing, AT&T will immediately gain cell sites equivalent to what would have taken on average 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 percent in some of its most populated areas, while avoiding the need to construct additional cell towers. This transaction will increase spectrum efficiency to increase capacity and output, which not only improves service, but is also the best way to ensure competitive prices and services in a market where demand is extremely high and spectrum is in short supply.

Expands 4G LTE deployment to 95 percent of U.S. population – urban and rural areas

This transaction will directly benefit an additional 46.5 million Americans – equivalent to the combined populations of the states of New York and Texas – who will, as a result of this combination, have access to AT&T’s latest 4G LTE technology. In terms of area covered, the transaction enables 4G LTE deployment to an additional 1.2 million square miles, equivalent to 4.5 times the size of the state of Texas.  Rural and smaller communities will substantially benefit from the expansion of 4G LTE deployment, increasing the competitiveness of the businesses and entrepreneurs in these areas.

Increases AT&T’s investment in the U.S.

The acquisition will increase AT&T’s infrastructure investment in the U.S. by more than $8 billion over seven years. Expansion of AT&T’s 4G LTE network is an important foundation for the next wave of innovation and growth in mobile broadband, ensuring the U.S. continues to lead the world in wireless technology and availability.  It makes T-Mobile USA, currently a German-owned U.S. telecom network, part of a U.S.-based company.

An impressive, combined workforce

Bringing AT&T and T-Mobile USA together will create an impressive workforce that is best positioned to compete in today’s global economy. Post-closing, AT&T intends to tap into the significant knowledge and expertise held by employees of both AT&T and T-Mobile USA to succeed. AT&T is the only major U.S. wireless company with a union workforce, offering leading wages, benefits, training and development for employees. The combined company will continue to have a strong employee and operations base in the Seattle area.

Consistent with AT&T’s track record of value-enhancing acquisitions

AT&T has a strong track record of executing value-enhancing acquisitions and expects to create substantial value for shareholders through large, straightforward synergies with a run rate of more than $3 billion, three years after closing onward (excluding integration costs). The value of the synergies is expected to exceed the purchase price of $39 billion. Revenue synergies come from opportunities to increase smartphone penetration and data average revenue per user, with cost savings coming from network efficiencies, subscriber and support savings, reduced churn and avoided capital and spectrum expenditures.

The transaction will enhance margin potential and improve the company’s long-term revenue growth potential as it benefits from a more robust mobile broadband platform for new services.

Additional financial information

The $39 billion purchase price will include a cash payment of $25 billion with the balance to be paid using AT&T common stock, subject to adjustment.  AT&T has the right to increase the cash portion of the purchase price by up to $4.2 billion with a corresponding reduction in the stock component, so long as Deutsche Telekom receives at least a 5 percent equity ownership interest in AT&T.

The number of AT&T shares issued will be based on the AT&T share price during the 30-day period prior to closing, subject to a 7.5 percent collar; there is a one-year lock-up period during which Deutsche Telekom cannot sell shares.

The cash portion of the purchase price will be financed with new debt and cash on AT&T’s balance sheet. AT&T has an 18-month commitment for a one-year unsecured bridge term facility underwritten by J.P. Morgan for $20 billion.  AT&T assumes no debt from T-Mobile USA or Deutsche Telekom and continues to have a strong balance sheet.

The transaction is expected to be earnings (excluding non-cash amortization and integration costs) accretive in the third year after closing. Pro-forma for 2010, this transaction increases AT&T’s total wireless revenues from $58.5 billion to nearly $80 billion, and increases the percentage of AT&T’s total revenues from wireless, wireline data and managed services to approximately 80 percent.

This transaction will allow for sufficient cash flow to support AT&T’s dividend. AT&T has increased its dividend for 27 consecutive years, a matter decided by AT&T’s Board of Directors.

Conditions

The acquisition is subject to regulatory approvals, a reverse breakup fee in certain circumstances, and other customary regulatory and other closing conditions. The transaction is expected to close in approximately 12 months.

Advisors

Greenhill & Co., J.P. Morgan and Evercore Partners acted as financial advisors and Sullivan & Cromwell LLP, Arnold & Porter, and Crowell & Moring provided legal advice to AT&T.

Conference Call/Webcast

On Monday, March 21, 2011, at 8 a.m. ET, AT&T Inc. will host a live video and audio webcast presentation regarding its announcement to acquire T-Mobile USA. Links to the webcast and accompanying documents will be available on AT&T’s Investor Relations website. Please log in 15 minutes ahead of time to test your browser and register for the call.

For dial-in access, please dial  +1 (888) 517-2464 within the U.S. or  +1 (630) 827-6816 outside the U.S. after 7:30 a.m. ET. Enter passcode 8442095# to join or ask the conference call operator for the AT&T Investor Relations event.

The webcast will be available for replay on AT&T’s Investor Relations website on March 21, 2011, starting at 12:30 p.m. ET through April 21, 2011. An archive of the conference call will also be available during this time period. To access the recording, please dial  +1 (877) 870-5176 within the U.S. or  +1 (858) 384-5517 outside the U.S. and enter reservation code 29362481#.

Transaction Website

For more information on the transaction, including background information and factsheets, visit www.MobilizeEverything.com.

Do leave your thoughts in the comments! We want to hear what AT&T and T-Mobile iPhone users think of this acquisition.

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  • http://www.ititothemes.wordpresscom iTito

    Wtf? Bye bye unlimted 4G data for me. Im changing over to sprint or verizon. AT&T SUCK MY BALLS.

    • http://www.wix.com/pwnhkr/phi PwnHkr

      I agree.

      • http://www.ititothemes.wordpress.com iTito

        yeah man, T-Mobile is a great company. i been with them for a long time and now AT&T is taking over? i feel dissapointed cos i won’t get unlimted 4g data anymore.

    • RandomPerson

      Same as what I said in the newer one.

  • Steve Jobz

    This is a nightmare no more tmobile no more affordable reasonable prices now AT&T is gonna charge everyone so much no!

    But like the first guy said, I’m going to sprint or verizon at least I get unlimited data there.

  • Great$

    I’ve been waiting for sum news like this I just really really hope T-Mobile does not end up treating there customers like att does. Hopefully att isn’t just trying to get rid of sum competition so that they can continue their Choke hold on it’s customers. Plus they better keep even more plus plans. Either way I have high hopes for this deal!!!

  • Max

    Wow a crap shit company buys a good solid one!!! I feel sorry for all t-mobile customers :-/

  • adidas101

    This is horrible for consumers. T-Mobile has always been cheaper than at&t a monopoly is no bueno we lose in the end. Sprint better not get bought out by verizon or we r fucked

  • Khoa

    I currently use a $5 Web2go plan for my unlocked iPhone grandfathered in from years ago. I hope I get to keep that. :$

  • Great$

    What everyone is sayin is true I completely agree but since I am currently with tmobile on edge data with a even more plus plan I have no choice Im going to tough it out and hopefully all will remain well which is very naive to say :( I’m fucked aren’t I!!!

  • Doug

    Cool. Fuck verizon. Att is the largest wireless company in America. Hahahaha

    • RandomPerson

      Agreed.

  • Rasta

    Sebastian, what do you think that means for those of us who are running our iPhones on tmobiles t-zones plan? Are we gonna get like and now get 3G speeds for $5.99? Or is AT&T going to force some mandatory upgrade bullshet?? What do you think???

    • http://www.iphonedownloadblog.com Sebastien

      I think that whatever plan and rate you’re on is going to remain the same for as long as you don’t change your plan.

      • http://www.ititothemes.wordpress.com iTito

        but would happen when you renew your contract? AT&T is not going to give unlimited data after your T-Mobile contract is over.

  • Jason Masters

    I’ve been with Tmobile for years and this just rained on my parade!
    I have had all my iPhones unlocked and on all unlimited plan with no contract for 3 lines it’s 170 total for two it’s 140 I know AT&T will destroy this plan and make everyone go contract! A sad day for us Tmobile users a truly sad day I guess I might have to to the other shitty company verizon well see how this plays out….. To be continued…..

  • DaBulls1554

    You realize that this has to be approved by the FCC first right? Meaning that at minimum we’re a year away from AT&T actually taking control of TMobile USA.

  • MALdito

    I wonder if the new company will be called “AT& T–MOBILE” or “AT–MOBILE”?…LOL (Yeah, Bad name and bad joke)

    • Junior

      Its gonna be called att-mobile. Ha

  • http://getyourgadgetsgoing.com Tristan Thomas

    This makes me really sad. I wonder how the different manufactures will react to this. More carriers produced more phones which produced more options. So to see T-Mobile go is sad.

    However, its not all bad. T-Mobile issued a statement regarding the acquisition.

    In the statement they gave a few of the common questions they were asked and answer to them regarding the buy out. You can check it out here: goo.gl/hYN9u

  • Gertgerman

    It won’t be done and dusted very soon. I work for orange uk and we merged with t-mobile uk I think it was around 18 months ago. We’ve only just recently started sharing networks and it’s still only via manual network selection. Before t-mobile completely disappears and you only have AT&T you’ll be waiting years. Wouldn’t worry just yet.

  • iKing

    Everyone calm down just cause one company buys another doesn’t necessarily mean that is going to be combined into one. AT&T may just keep T- Mobile operations the same and could just want to increase their profit. It’s a lot of possibilities that could arise. Don’t assume the most popular one.

  • Jason Masters

    Murphys law hope for the best expect the worst! Tmobile iz dun att will crush all prepaid and force us into ten year contracts lol!!

  • javierE186

    Damn it here I thought it would be Sprint that would buy T-Mobile, now us T-Mobile costumers are screwed. Well Simple Mobile here I come xD.

    • rath

      Simple mobile uses t-mobile network. witch means they might not get a new contract from att to keep them using the t-mobile network. Just saying could be a possibility!!!!!!

  • Jason Masters

    Simple mobile might be our only escape lol!
    Well see if we will get the shaft time will tell?

  • Jack Roberts

    This purchase expands AT&T’s 4G LTE.

  • kokhean

    Sorry, T-Mobile users.

  • icyhotonmynuts

    All that’s left now is for Verizon to scoop up Sprint and voala. Wireless competition to become obsolete in the States.

    • rath

      hey ya know metro-P@*$(@# of S*@# is trying to flash verizon iphones. may be theyll be are hope for unlimited everything.LOL

  • http://www.newitworld.com Technology

    Thanks for sharing information about iphone and at&t mobile

  • DaPlumber

    Sigh. Because the other smaller wireless carriers that the Death Star borged are so well integrated these many years later. NOT. There are still parts of my area where I have plenty of signal and the cell towers do not hand off properly and drop the voice call. Every FRACKIN time! Yes Virginia, I can watch it happen in real time on the excellent JB app “Signal” (one of the best apps I ever bought). Then there’s the “free” Wi-Fi that’s usually too busy and still requires sign-in. “Integrated Network”, my ass! “Integrated monopoly” more like. Damn Bell-Heads still think the same way after all these years. Dear Apple: please create a Virtual Network Providor that runs over both Big Red and Big Orange for the next iPhone. Buy the capacity in bulk. Resell at a premium. He’ll, I’d pay it and be happy to no longer deal with Bell-Heads. BTW, bet the mortgage that Google has this in the works…

  • gh0stryt3r

    There is an option for a carrier choice in the phone settings. 4.2.1 I think Apple pushed the carrier update today when I restored. I haven’t followed the news about that until the T-Mobile announcment.
    I’m using a 3G.

  • gh0stryt3r

    oh yeah, I forgot the punch line.

    AT&T and T-Mobile were options for carriers. (or default to automatic)
    I was setting up a go phone sim on my iphone and I’m not sure if that is the reason l was offered the option.

    • Jason Masters

      That’s always been there if your unlocked nothing new.

  • Shree3Ray

    i’m going to Sprint now after 8 years with T-mobile…ATT’s data plan rate sucks….like some one said previously “we will miss you unlimited data plan”

  • chazyd

    I hate AT&T I have been avoiding them for some time. They charge too much and the customer service sux! They will eventually OWN the whole cell phone market eventually. They own Tracfone and Net 10 also….T Mobile knows how to treat it’s customers

  • Brendon

    I Hate att. there customer service treats you like shit, i have tmobile, im happy with my plan and my bill is okay. i now have to go back to att. wtf. GO ANDROID.