AT&T to get their hands on T-Mobile USA

AT&T has announced the acquisition of T-Mobile USA, with this purchase having the aim of reinforcing their presence in the US market at this time where mobile Internet traffic has exploded, with 4G networks just around the corner.

American carrier AT&T made it known that they were looking at acquiring T-Mobile USA, an affiliate of the German carrier Deutsche Telekom who specializes in mobile telephony, in exchange for 8% of their capital.

Valued at 39 billion dollars, this transaction is one of the largest ever made in the telecommunications sector. It will allow AT&T to welcome 34 million clients into their stable in addition to their current 95 million active clients, positioning them as the largest payer in the US mobile phone market with 40% market share, just ahead of Verizon who controls 35%.

In the longer term, this will allow them to reinforce their infrastructure at a time when Smartphone’s have exploded mobile Internet traffic consumption and just before the release of their LTE standard, more often known as 4G (see our article on this).

The operation should be finalized in the coming 12 months, after gaining approval from the American regulators. But there may potentially be some issues on this front considering AT&T already holds a dominant market position, something which the acquisition of T-Mobile will only reinforce.

One step too far?
Last week, the carrier Sprint (third largest carrier in the US) looked like they would be acquiring T-Mobile, in a move that seemed the most logical for the US market. If today’s agreement is finalized, Sprint will find it a lot more difficult to fight the two giants AT&T and Verizon Wireless.

The FCC (Federal Communications Commission), who plays the role of regulator of the American telecommunications sector already began worrying about this last year, due to the limited competition present in the US market.

While the merger will allow for reduced costs and a widened network of available spectrum ranges, it may also lead to numerous redundancies.

But for Deutsche Telekom, this will allow them to drastically improve their finances, as T-Mobile USA regularly lost money and dragged down their results. In the United Kingdom, the German group has also signed an agreement with Orange for their T-Mobile UK affiliate (which also lost money), creating a new entity called Everything Everywhere.