AT&T Acquiring T Mobile USA, Becomes Even Bigger

March 21st, 2011 at 12:10 pm
 


With competition among telecom firms getting even tougher and tougher, it might be a wise decision sometimes for to firms to join forces not only to minimize the competition but also to extend network reach. And probably with that in mind, AT&T may have just made its biggest acquisition yet. It is set to acquire T Mobile USA for a cool US$39 billion.

Considered as the recent blockbuster deal to come out yet this year, AT&T has agreed in terms to acquire T Mobile USA, its erstwhile competitor from Deutsche Telekom. AT&T is already one of the dominant players in the telecom industry in the US with over 95 million subscribers. The acquisition is set to give AT&T an additional 33 million subscribers in its fold. This move is set to put AT&T in the leader board in terms of subscriber numbers, with Verizon Wireless becoming a close second with more than 100 million subscribers.

The terms agreed upon on the merger is that AT&T will pay Deutsche Telekom US$25 billion in cash and with the remainder of the total in the form of stock. This will amount to an 8 percent stake for Deutsche Telekom on AT&T, along with a seat on its board of directors.

Although there already has been an agreement between the two boards of directors from the two companies, it may not yet be etched n stone yet. The deal has yet to go through the regulatory approval process, which can take about a year to complete.  This can be the tricky part on the merger.

Although minimizing the competition in the telecom industry may give the remaining players a more dominant share of the market, the regulatory commission may not always be pushing for such moves. With the merger, the situation will be that only AT&T and Verizon Wireless will end up as the dominating competitors in the telecom market. The two wireless companies will be holding a 60 percent share of the total market. It might be a situation that might alarm the regulators and may need to study the proposal first.

But on the side of AT&T, the move certainly has given it a bigger opportunity for future growth. The merger has put together the two largest GSM carriers in the US. This means that people will likely be choosing from a single wireless carrier in case the intent to use the GSM standard, the dominant wireless technology used around the globe. Not only that, the merger will also benefit T Mobile USA’s current subscriber base, giving them access to AT&T’s extensive wireless network all over the US.

 

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