ATandT acquires T-Mobile for $39 billion

ATandT Inc. has just signed a deal with Deutsche Telekom AG to purchase T-Mobile USA in a cash and stocks deal worth appoximately $39 billion. The boards of directors of ATandT and Germany's Deutsche Telekom have approved the acquisition, which is subject to regulatory approvals and is expected to close in about a year, the wireless companies said in a joint statement Sunday.

The deal would see ATandT - currently the second largest wireless carrier in the US - become about one third larger than Verizon, currently the largest US wireless phone provider.

Assuming the deal goes through, it brings mixed news for consumers, who will benefit from improved quality and coverage in high-speed mobile broadband service, according to Forrester Research analyst Charles Golvin.

"The bad news: the cost of that service won't come down nearly as fast as customers would like, since ATandT and Verizon Wireless combined would own nearly three out of every four wireless subscriptions in the U.S.," Golvin wrote in an email.

The news is also not good for cable operators, "whose incipient mobility products will suffer in comparison to what ATandT and Verizon can offer," Golvin added.

The purchase includes $25 billion in cash, with the remainder to be covered with ATandT common stock. AT&T can hike the cash part of the purchase by up to $4.2 billion, the statement said.

The deal will also give Deutsche Telekom an 8% stake in ATandT, and a Deutsche Telekom representative will join ATandT's board.