Earlier today, AT&T announced that it would acquire T-Mobile from Deutsche Telekom for $39 billion just a day before the CTIA Wireless 2011 conference kicks off in Orlando. The first day keynote speakers include Ralph de la Vega and Philipp Humm, the President & CEO of AT&T Mobility and T-Mobile USA, respectively. Skatter Tech will attend the event and I’m sure there will be some interesting topics during the round table following the presentations.
René Obermann, CEO Deutsche Telekom: We have achieved the best solution for our company, our customers and shareholders. This will strengthen our position in Europe, whilst we are still participating in the rapidly growing business of mobile data. We will be able to focus more on the opportunities of a modern infrastructure in Germany and Europe, as well as in Internet products that accompanies to our strategy “fix, transform and innovate”.
According to the press release, Deutsche Telekom will receive $25 billion in cash and another $14 billion in AT&T shares bringing the total to 39 billion to entirely hand over T-Mobile. This means the European carrier will essentially own 8% of AT&T. Although some early rumors indicated that Sprint would merge with T-Mobile, this news makes more sense. Both AT&T and T-Mobile use the same GSM technology. This is also an important financial move for Deutsche Telekom which is looking to reduce the company’s dept by nearly 13 billion EUR. AT&T also expects to reach an additional 46.5 million customers with their upcoming 4G LTE network, thanks to T-Mobile’s infrastructure.
What Does It Means For T-Mobile Customers?
The news brought some concern for existing T-Mobile subscribers and the company decided to publish another press release to answer some questions. For starters, the process for regulatory approvals will take nearly a year meaning both carriers will operate normally and separately until then.
For those wondering, T-Mobile customers will not have their service changed. AT&T does not plan to take over billing, but that may change a year from now. T-Mobile claims that their 4G LTE coverage will soon reach 95% of the country once they have access to AT&T’s network and spectrum.
The company also encourages customers to sign up for their service or even buy a new smart phone without concern about the acquisition. T-mobile was also clear to note that the Apple iPhone 4 would not be heading their way anytime soon, but that the Samsung Galaxy S 4G and Sidekick 4G are their flagship devices. Unfortunately, monthly rates may change in the future, but existing customers will not have to pay the new fees unless they upgrade their device or change plans.
Why Is AT&T Acquiring T-Mobile?
After Verizon Wireless made some acquisitions including Alltel, it became the largest carrier with nearly over 90 million customers. With T-Mobile underneath its wing, AT&T will steal first place becoming the largest domestic carrier with over 125 million customers.
As it is well-known, AT&T has had trouble handling the sudden growth in data consumption with the latest generation of hungry smart phones. Offloading some of the stress onto the T-Mobile network is probably more affordable and faster than having to rebuilt new towers in congested areas. The press release even notes that AT&T’s network density would increase by as much as 30% in certain areas.