AT&T Buys T-Mobile USA

AT&T Inc. has agreed to buy T-Mobile USA from Deutsche Telekom AG for $39 billion in cash and stock, in a deal that would create an industry giant by combining the second-largest and fourth-largest U.S. wireless carriers.

It isn't clear whether regulators will allow the transaction, one might argue. It might be so much that the deal would reduce the number of leading national providers from four to three, but that it allows one of the top-two to become so much larger.

Should the deal be approved, however, AT&T would vault to the leading position, becoming 33 percent larger than Verizon Wireless, today the leader in terms of market share. Should the deal be approved, and should no rival bid emerge, Sprint would retain its third-place rank, but without any hope of a rapid way to level the playing field. There has been speculation that Sprint and T-Mobile USA might merge, thereby creating three roughly equivalent-sized players in the U.S. market.

By some estimates, the merged AT&T and T-Mobile USA would have about 43 percent market share in the U.S. wireless market. Of course, even before the deal gets final regulator clearance, there always is some chance of a rival bid emerging.

Also, Verizon Wireless might respond with an acquisition of its own. Were Verizon to buy Sprint, it would again retake the number-one spot in the wireless market, and give two carriers control of about 91 percent of the U.S. mobile market.

http://www.businesswire.com/news/home/20110320005040/en/ATT-Acquire-T-Mobile-USA-Deutsche-Telekom