This is definitely going to be one of the biggest milestones in the year 2011. AT&T is buying out T-Mobile USA from Duetsche Telekom AG for $39 billion in a cash and stock transaction. Duetsche Telekom will get roughly 8% stakes in AT&T after this deal.
AT&T has been under lot of pressure for dropped calls, bad voice quality and capacity related problems. AT&T is buying out T-Mobile partly to mitigate the capacity problems and partly to acquire the T-Mobile's customer base of 35 million. With this acquisition, AT&T becomes America's largest wireless operator with a customer base of 130 million (AT&T has a customer base of 95 million before the deal). Verizon will be pushed to the second spot with a customer base of 100 million and Sprint to the third position with a customer base of 50 million. America's total population is estimated to be around 320 million and AT&T - T-Mobile will cover 40% of that population. Impressive!
According to AT&T, this deal will help them to strengthen the infrastructure and improve the network quality. In addition, it will enable them to offer LTE capabilities to wider population.
"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."
According to Duetsche Telekom, this deal is highly beneficial to their shareholders and to their customers (!).
"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."
Recently American President Obama had set a goal to connect every part of America through digital communications. So, AT&T and T-Mobile is fueling his vision :)
However, this deal is not without any drama. Earlier, it was speculated that Sprint will merge with T-Mobile USA and the deal value speculated around $25 billion. There were also some doubts hovering over the possible anti-trust issues if AT&T merges with T-Mobile. Everything seems to have been completely dismissed now. The new announcement seems to have come in a hurry and naturally has left lot of AT&T and T-Mobile employees confused. So here's what T-Mobile CEO writes to his employees (provided below).
What is the next move? Verizon acquires Sprint? Both Verizon and Sprint offer CDMA based wireless services. So, that deal looks like a high possibility. If that deal happens, the Verizon Sprint Merger will have a combined user base of 150 million which will be bigger than AT&T+T-Mobile.
I write to you over the weekend with important news. Today we announced the beginning of a new journey for T-Mobile USA. AT&T and Deutsche Telekom have reached an agreement for AT&T to acquire T-Mobile USA, positioning the combined company to create a world-class platform for mobile broadband innovation and growth. Deutsche Telekom will become the largest shareholder of AT&T.
The sale of T-Mobile USA to AT&T is the best possible solution for our business and for our customers. The merger will ensure the deployment of a robust 4G network to 95% of the U.S. population, something neither company could achieve on its own. Also, because of our compatible networks and spectrum, the customers of T-Mobile USA and AT&T will experience improved voice and data service almost immediately after the networks are integrated.
Additional details about this transaction are included in a press release attached to this e-mail.
I know this news is unexpected and may be somewhat unsettling, but I am confident that our strong culture and T-Mobile USA Values will help guide us through this process. Bringing together these two world-class businesses will create significant benefits for our customers. T-Mobile is a wonderful business, with great employees who have always demonstrated a willingness to do what it takes to be successful. Frankly, that is exactly why AT&T expressed an interest in combining our organization with theirs.
AT&T has a proven track record of growing through successful integrations. Their leaders recognize that making this combination a success will require the talent and commitment of T-Mobile USA employees. I believe you will see that reflected in their statements and their actions. In fact, AT&T’s leadership has said keeping our talented people through this transition is one of their top priorities.
It is important to keep in mind that this transaction requires regulatory approval from government agencies; until that time we remain T-Mobile USA and must continue to operate independently. It is expected that this deal will close within 12 months. With that in mind, I ask that each of you remain focused on the outstanding work you do every day to meet and exceed our customers’ expectations.
I ask you to join me in embracing this new opportunity to build America’s premier mobile broadband company. In the meantime, continue to execute our Challenger strategy – there‘s a lot of work to do in the year ahead.
I promise to make more information available to you in the coming days and weeks on OneVoice and through your leaders.
Thank you for your ongoing commitment and support.
With sincere appreciation,
CEO & President