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AT&T's Acquisition Of T-Mobile USA Dramatically Consolidates The US Wireless Market

AT&T Reclaims No. 1 Position

March 23, 2011

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Why Read This Brief

AT&T announced plans to purchase T-Mobile USA from Deutsche Telekom for $39 billion in cash and stock. If regulators approve the deal, AT&T will be the largest wireless carrier in the US, leaping ahead of Verizon Wireless and reducing the number of major network operators in the US from four to three: AT&T, Verizon Wireless, and Sprint. Deutsche Telekom will benefit from the acquisition by reducing its debt by 31% through a cash infusion of $25 billion and by acquiring AT&T stock valued at $14 billion. With new spectrum from the acquisition, AT&T will focus on increasing its network capacity and coverage, as well as on expanding Long Term Evolution (LTE) technology deployment. This wireless market consolidation also has important implications for strategists at device manufacturers and application developers, who will have one fewer US network operator to target; however, the value of potential contracts will increase to support larger network deployment initiatives.

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