AT&T to acquire T-Mobile USA for US$39B

Big news today: AT&T announced that they are planning to acquire US rival T-Mobile. AT&T is ready to offer 39 billion dollars in a cash and stock deal.

Rene Obermann who is the chairman and CEO at Deutsche Telekom said in a statement that after evaluating strategic options for T-Mobile, he is positive that AT&T is the best partner for costumers, shareholders and the mobile brand ecosystem. This transaction will return significant value to Deutsche Telekom shareholders and will allow US top retain exposure to the US market.

This is a great deal for AT&T because it allows them to expand its future LTE network to cover 95% of the American population. This will include rural communities and small towns too.

Today AT&T is the second largest mobile operator in the US, and T-Mobile is on the fourth position. But with this deal, according to Wireless Intelligence, AT&T will be by far the number one player, with 130 million connections and around 42% market share.

If everything will be fine, AT&T and T-Mobile hope to close the deal in around 1 year from now.

In this transaction DT will receive an equity stake in AT&T, and based on the terms of agreement DT will own interests in AT&T approximately 8%. This will make DT the biggest minority shareholder in the largest US mobile operation. The deal had already been approved by both companies’ Boards of Directors.

The initial 39 billion dollars amount will include a cash payment of 25 billion dollars by using AT&T common stock. The transaction is expected to bring earnings in the third year after closing.

This big move form AT&T will surely dominate all the talks from the CTIA event in Orlando, Florida which will took place this week.