AT&T To Acquire T-Mobile for $39B to Create Wireless Giant

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AT&T announced a deal to acquire rival T-Mobile USA from Deutsche Telekom for $39 billion in cash and stock, a move which would create the nation’s largest wireless carrier.

AT&T is currently the country’s second largest cellular carrier according to comScore as of December, with 26.6% of market share, trailing Verizon’s 31.3%. T-Mobile is just ahead of rival Sprint with 12.2%. The company resulting from the proposed merger would have more than 130 million subscribers, 40% of wireless phone subscriptions, or more than half of all estimated 237 wireless mobile phone users in the United States according to eMarketer.

In addition to the number of subscribers, the deal would merge the United States’ two major GSM carriers, giving customers only one carrier using that standard. GSM is the dominant global wireless technology and the standard in Europe, meaning that Americans who frequently travel overseas will need an AT&T phone.

The acquisition is pending regulatory approval, though AT&T is confident that it would be approved within 12 months. Analysts consider it unlikely that the Federal Communications Commission or the Department of Justice would prevent the merger, but are expected to make AT&T make concessions. T-Mobile will continue to act as an independent company for the time being, and customers should not expect any immediate changes. T-Mobile has posted a frequently asked questions page on their website regarding the acquisition to ease customers’ anxiety.

Consumer advocacy groups have already expressed opposition, claiming that the deal will result is less competition and higher prices, poorer customer service, and stifle innovation. Some argue that this further industry consolidation is becoming more and more like the “Ma Bell” monopoly that was forcibly broken up in 1984. Some Washington lawmakers urged scrutiny by federal regulators. “It is absolutely essential that… [we] leave no stone unturned in determining what the impact of this combination is on the American people,” Sen. John D. Rockefeller IV (D-W.Va.) said.

AT&T pitched the deal as a way to solve network congestion, by combining two carriers using the same technology and alleviating a wireless spectrum shortage which prevented T-Mobile from building a next-generation network, as well as being able to better cover rural areas. “The U.S. wireless industry is one of the most fiercely competitive markets in the world and will remain so after this deal,” AT&T spokesperson Lauren Harris said. However, opponents are quick to label such claims misleading because they are including much smaller regional carriers that struggle to keep up.

Sprint, who was rumored to be in talks to acquire T-Mobile, has vowed to fight the proposed acquisition. “Sprint urges the United States government to block this anti-competitive acquisition,” Vonya McCann, the company’s senior vice president of government affairs, said in a statement. “This transaction will harm consumers and harm competition at a time when this country can least afford it. So on behalf of our customers, our industry, and our country, Sprint will fight this attempt by AT&T to undo the progress of the past 25 years and create a new Ma Bell duopoly.”