Today’s explosive demand for mobile broadband has led to one stunning deal Sunday.
In a move described as a “fast, efficient and certain solution to impending spectrum exhaust challenges” facing the company, AT&T announced that it will acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction valued at approximately $39 billion. In return, Deutsche Telekom will acquire approximately 8 percent of AT&T and gain a seat on AT&T’s board of directors.
The transaction, pending regulatory approval, will soon make AT&T the largest carrier in the U.S. It will also expand the company’s LTE 4G-based deployment to 95 percent of the US population, reaching an additional 46.5 million Americans, including those in rural communities and small towns. Currently, AT&T and T-Mobile USA have a combined total of over 125 million subscribers, while Verizon, AT&T’s closest rival, has over 93 million.
“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.”
In an op-ed piece on Mashable, Ben Parr says that the move is less about subscriber bases than about AT&T preparing for the 4G era of wireless communication.
“AT&T believes it will take years until more spectrum is opened up by the U.S. government for mobile broadband use,” Mr. Parr writes. “The simplest way to get its hands on precious broadband is through acquisition, and T-Mobile USA has the most GSM broadband spectrum after AT&T.”
He adds: “AT&T simply can’t build towers fast enough, and the approval process to build the unsightly things acts as a major roadblock to the company’s efforts to boost its network reliability. So if you can’t build towers fast enough, what’s the next best way to get them? That’s right: You acquire them…. If the deal is approved, expect AT&T to quickly offload some of its mobile data traffic on T-Mobile’s infrastructure.”