AT&T just announced a deal to buy T-Mobile USA from Deutsche Telekom in a cash and stock deal worth $39 billion.
The deal would make AT&T the nation’s largest wireless carrier by a wide margin, so it will probably face significant government scrutiny, and AT&T could have to make some big concessions.
Or the deal could be blocked completely — last year was the first year that the FCC did not conclude the U.S. wireless industry was “competitive.” The companies expect the deal to close in “approximately 12 months” — a long time.
At the end of 2010, AT&T had 95.5 million wireless subscribers and T-Mobile had 33.7 million subscribers, for a combined total of 129.2 million subscribers. Verizon Wireless had 94.1 million wireless customers.
There had been reports that Sprint, the no. 3 biggest carrier, was looking at buying T-Mobile. But AT&T has obviously made a better offer, and now Sprint may have to get absorbed by Verizon, Comcast, or someone else.
The benefits to T-Mobile customers will be faster access to LTE wireless — true 4G — and potentially faster access to Apple’s iPhone.
Combining AT&T and T-Mobile makes more sense technically, too, as the companies share a common wireless technology, while T-Mobile and Sprint use different technologies.
This is a huge deal that, if allowed, could have wide-ranging effects on the wireless industry. It’s AT&T’s first major deal since 2006, when it acquired BellSouth, its partner in Cingular Wireless, which was then renamed AT&T Mobility.
This also solves Deutsche Telekom’s execution challenges with T-Mobile USA — it can now let AT&T, led by wireless CEO Ralph de la Vega, do the hard work, while getting an approximately 8% ownership stake in AT&T.
The companies will host a conference call at 8 a.m. ET Monday morning. Stay tuned to Business Insider for LIVE coverage.