MUMBAI: Telecom major AT&T has agreed to buy T-Mobile USA from Deutsche Telekom for $39 billion, creating in the process the largest cellular carrier in the United States.
Under the terms of the deal, AT&T will pay $25 billion in cash and the balance in stock. Deutsche Telekom will in turn gain an eight per cent stake in AT&T and a seat on the telecom giant‘s board.
The merger, said to be one of the largest since the onset of the financial crisis, would combine the second and fourth largest cellular carriers in the nation, amalgamating AT&T‘s 95.5 million wireless subscribers with T-Mobile‘s 33.7 million customers.
It is being said that the deal could result in higher prices for consumers. T-Mobile had offered some of the lowest rates in the country. While AT&T is expected to honour current T-Mobile contracts, it is likely that once a number validity expires, T-Mobile customers may have to pay AT&T higher rates.
The deal is also a big cost-saver. The merged company is expected save more than $40 billion over three years by closing down retail outlets in areas where they overlap, thereby reducing the need to build new cellular sites as well as eliminating overlapping back office, technical and call centre staff.
