We can expect some changes happening in the telecom industry as AT&T have just announced that they just entered a definitive agreement with Deutsche Telekom with the main purpose of buying T-Mobile USA for $ 39 billion worth of cash and stocks.
AT&T is apparently the largest provider of fixed telephony in the US and is also involved in providing broadband and subscription television services as well while T-Mobile USA on the other hand is a nationwide provider of wireless voice, messaging and data services in the US. This buyout agreement will surely make an impact in the industry considering the fact that the two companies would give a combination of around 130 million customers.
This buyout deal still needs to pass some regulatory approval before it finally becomes complete. Apparently, it will take around 12 months in order to get through all legal procedures and once it finished this would make AT&T the largest wireless provider in the US and we can expect that the US market will continue to be competitive even after this deal as promised by AT&T via a press release.
The combination of these two companies definitely has some advantages and disadvantages. One of the advantages that we see on this deal is that we can expect some significant improvement in the speed, quality and coverage of its mobile broadband service thus, making it more accessible even to those rural areas which can’t be reached by broadband services nowadays. However, the disadvantage of this deal is that we can expect the cost of this service to be a little costly considering the fact that it could dominate the whole telecom industry.
In addition to this, those small mobile competitors and cable operators will also find it hard to compete considering the fact that this deal will make AT&T cement its status further in the industry. However, if this deal fails to receive regulatory approval AT&T will be giving T-Mobile USA a $ 3 billion break-up fee together with the transferring over of some AWS spectrum and the granting of a roaming agreement at a value agreed by the two parties.
The DOJ and FCC must really look into the advantages and disadvantages of this deal between AT&T and T-Mobile and determine whether this deal is for the best interest of the consumers as well as for the whole industry as well before finally granting regulatory approval. Let us wait and see what happens next.
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Tags: advantages, AT&T, at&t plans to buy t-mobile, Deutsche Telekom, issues, price, problems, T-Mobile
