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AT&T To Acquire T-Mobile USA For $39 Billion – What Does It Mean For Its Customers?

March 20th, 2011 03:50 admin Leave a comment Go to comments

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AT&T has just announced that it will be acquiring T-Mobile USA from Germany’s Deutsche Telekom for $39 billion in stock and cash.

So it looks like T-Mobile customers in the US will get the iPhone (indirectly) sometime in the future, which has been offered exclusively by AT&T since the launch of the iPhone and is also offered by Verizon from February 2011.

AT&T and Deutsche Telekom has issued the following statement to announce the deal:

“This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future,†said Randall Stephenson, AT&T Chairman and CEO. “It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people. 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.â€

Stephenson continued, “This transaction delivers significant customer, shareowner and public benefits that are available at this level only from the combination of these two companies with complementary network technologies, spectrum positions and operations. We are confident in our ability to execute a seamless integration, and with additional spectrum and network capabilities, we can better meet our customers’ current demands, build for the future and help achieve the President’s goals for a high-speed, wirelessly connected America.â€

Deutsche Telekom Chairman and CEO René Obermann said, “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.â€

So what does it mean for customers?

The acquisition should help AT&T and T-Mobile to improve the voice quality thanks to the increased cell tower density and broader network infrastructure, especially AT&T whose customers have often complained about poor network coverage. It should be one of the quick wins from the deal for AT&T as it takes the carrier three years to get approval for a new cell tower in cities like San Francisco.

But in the long term as Om Malik of GigaOM network points out that customers, handset makers (except Apple), Sprint, Network Equipment Makers and Google will end up being losers from the merger. He believes customers will be the biggest losers:

The biggest losers of this deal are going to be the consumers. While AT&T and T-Mobile are going to try to spin it as a good deal to combine wireless spectrum assets, the fact is that T-Mobile USA is now out of the market.

T-Mobile USA has been fairly aggressive in offering cheaper voice and data plans as it has tried to compete with its larger brethren. The competition has kept the prices in the market low enough. This has worked well for U.S. consumers. With the merger of AT&T & T-Mobile, the market is now reduced to three national players – AT&T, Verizon and Sprint.  Net-net U.S. consumers are going to lose.

We are already seeing AT&T clamping down on unofficial iPhone tethering using jailbreak apps like MyWi and TetherMe. We wonder how a bigger AT&T will handle similar situations in the future.

Will T-Mobile get the iPhone?

It’s a question that many of our readers are asking. T-Mobile has also provided more information to its customers about AT&T’s acquisition in which it has answered the question:

Is T-Mobile USA getting the iPhone?

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.

Some observers think that it is a hint that it will offer Apple’s iPhone in the future. Probably, but don’t expect iPhone to be available on T-Mobile’s network anytime soon as the iPhone does not support T-Mobile’s 3G network (works over slow EDGE) unless iPhone 5 supports T-Mobile’s 4G/3G network.

What do you think about AT&T’s acquisition? Please share your views in the comments section below.

[via Business Wire, T-Mobile]

Source: AT&T To Acquire T-Mobile USA For $39 Billion – What Does It Mean For Its Customers?

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