AT&T announced on Sunday that it had agreed to buy T-Mobile US from Deutsche Telekom for $39 billion, in a deal that would create the largest carrier in the nation and promised to reshape the industry.
The transaction — one of the largest since the financial crisis began — would leave just three major cellular companies in the US: AT&T, Verizon and the much smaller Sprint Nextel.
The deal is expected to start a fierce battle in Washington as regulators scrutinise the impact of the deal on competition and consumers.
Some critics denounced the merger within hours of its announcement, saying it would most likely lead to higher prices. T-Mobile had offered some of the lowest rates in the country, keeping pressure on competitors. While AT&T is expected to honour current contracts, T-Mobile customers may have to pay higher rates once those contracts expire.
The acquisition would give AT&T leverage against its main rival, Verizon. It would also plug a significant hole in its list of offerings — data. Smartphone users have long ridiculed the company over dropped calls and slow data services.
The new company — bringing together AT&T’s 95.5 million wireless subscribers with T-Mobile’s 33.7 million customers — would account for roughly 42% of all wireless subscribers in the US. Verizon has around 31%, said Charles Golvin, a telecom analyst at Forrester Research. And now T-Mobile customers would have the option to buy an iPhone, helping AT&T combat the migration of the popular device to Verizon.
“From AT&T’s perspective, this is a huge win,” said Chetan Sharma, a wireless analyst. “It’s about being No. 1 and having economy of scale.”