Following news that it was in talks with Sprint, Deutsche Telekom today agreed to sell its interest in T-Mobile USA to AT&T for $39 billion and an 8% stake in AT&T.
The deal, which would face stiff regulatory scrutiny, would make AT&T the top wireless carrier in the US and "shift the competitive landscape" for mobile operators in America.
“This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future,” commented AT&T chairman and CEO Randall Stephenson in a press release that underlined that this deal is less about T-Mobile's brand — it will remain an independent company — and more about its network helping pave the way for 4G.
“It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people," Stephenson continued in his statment. "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.”
What the deal won't do — bring the iPhone to T-Mobile customers, as pointed out in T-Mobile's online Q&A on the deal: “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 chairman and CEO René Obermann explained why AT&T was the winning bidder:
“After evaluating strategic options for T-Mobile USA, I am confident that AT&T is the best partner for our customers, shareholders and the mobile broadband ecosystem. Our common network technology makes this a logical combination and provides an efficient path to gaining the spectrum and network assets needed to provide T-Mobile customers with 4G LTE and the best devices. Also, the transaction returns significant value to Deutsche Telekom shareholders and allows us to retain exposure to the U.S. market.”
Forrester Research analyst Charles Golvin commented:
"The good news: high-speed mobile broadband service will improve in quality and coverage, including — in the long run — those in rural communities outside the reach of terrestrial broadband today.
"The bad news: the cost of that service won't come down nearly as fast as customers would like, since AT&T and Verizon Wireless combined would own nearly three out of every four wireless subscriptions in the US. While clearly troublesome for Sprint and other mobile smaller mobile competitors, It's also bad news for cable operators, whose incipient mobility products will suffer in comparison to what AT&T and Verizon can offer.
"The new entity would also be the only GSM carrier in the US, something that will certainly play big with global users who use GSM when they travel abroad. The move will also consolidate spectrum held by the two units. The good news for current consumers is that radio equipment and devices on the two carriers are largely, but not totally, compatible."
Here's more from Obermann, for those who speak German: