Monday, March 21, 2011

AT&T to Buy T-Mobile

AT&T has announced that it will be acquiring T-Mobile USA from Deutsche Telekom for a whopping $39 billion. This is assuming that the government regulators allow AT&T to be the only true GSM carrier in the U.S., which they most likely will. Why? AT&T has released slides showing that with the purchase, the LTE rollout it’s planning will covers 95% of the U.S. and be able to offer better quality service in the short term which is what our President wants.


Of course the first question that popped into most people’s minds was “Does that mean T-Mobile has the iPhone!?”. Unfortunately, T-Mobile quickly released a FAQ detailing that they will not have the iPhone (in the short term).

They stated:

Is T-Mobile USA getting the iPhone?

T-Mobile USA remains an independent company. The acquisition is expected to be completed in approximately 12 months. We do not offer the iPhone. We offer cutting edge devices like the Samsung Galaxy S 4G and coming soon our new Sidekick 4G.


  • Deutsche Telekom to receive 39 billion USD for US-business
  • Deutsche Telekom to have up to 8 percent stake in the leading US telecommunications company
  • AT&T takes over US mobile business from Deutsche Telekom
  • Deutsche Telekom will receive 25 billion USD in cash and 14 billion USD in AT&T shares
  • Attractive multiple of 7.1 times 2010 adjusted EBITDA
  • Deutsche Telekom plans to use approximately 5 billion EUR for share buybacks
  • Deutsche Telekom net debt is planned to be reduced by approximately 13 billion EUR or 31 percent

    Deutsche Telekom will take an approximately 8 percent stake in US telecommunication company AT&T. At the same time Deutsche Telekom will hand over 100 percent ownership of T-Mobile USA to AT&T. This has been agreed by the boards of the two companies today. AT&T will pay 25 billion USD in cash for T-Mobile USA, in addition to 14 billion USD in AT&T shares. AT&T has the right to increase the portion of the purchase price paid in cash by up to 4.2 billion USD with a corresponding reduction in the stock component. The value of the transaction will be 39 billion USD. This will amount to an attractive multiple of approximately 7 times 2010 adjusted EBITDA. The merger still needs US regulatory approval. The closing of the transaction is expected to be completed in first half of 2012.

    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.”
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