AT&T Reveals Plans To Buy T-Mobile

AT&T unveiled a huge acquisition over the weekend. The telecom giant announced it is buying wireless rival T-Mobile in a deal valued at $39 billion. The deal will put 80 percent of the wireless market in the hands of just two competitors, AT&T and Verizon. Analysts say it's likely to face a tough review from antitrust regulators.

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ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, host:

I'm Melissa Block.

And it's time now for All Tech Considered.

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BLOCK: A big move in the wireless business. AT&T announced yesterday that it plans to buy T-Mobile USA from Deutsche Telekom. If it's approved by regulators - and that's a big if - the $39 billion deal would create the nation's largest wireless carrier.

NPR's Wendy Kaufman reports.

WENDY KAUFMAN: The merger would mean that just two companies, the new, bigger AT&T and Verizon would dominate the wireless industry, with about three-quarters of all wireless subscribers. AT&T, which is currently the second largest provider, would have well over 40 percent of the market if the deal goes through.

Speaking today, Randall Stephenson, AT&T's chairman and CEO, said this transaction represents a very unique opportunity and the benefits are possible at this scale and on this timeline only from the combination of these two companies.

Mr. RANDALL STEPHENSON (Chairman and CEO, AT&T): This will improve network quality. It will give more customers access to more services. It will bring advanced LTE capabilities to virtually every community across the United States. And it will create substantial value for our shareowners.

KAUFMAN: AT&T said the merger would increase its infrastructure investment by billions and billions of dollars. Charles Golvin, a telecommunications analyst at Forrester Research, says from AT&T's perspective, this is indeed a good move. It would give them additional airwaves or spectrum, which should translate to better quality and coverage.

Mr. CHARLES GOLVIN (Telecommunications Analyst, Forrester Research): Since AT&T had some deficiencies in their portfolio of airwaves and what T-Mobile has complements that to a great degree. They're very well positioned for being able to build their next generation network.

KAUFMAN: On the other hand, Golvin says the elimination of T-Mobile means less competition on price, and that possibility is troubling to Paul Reynolds, electronics editor at Consumer Reports.

Mr. PAUL REYNOLDS (Electronics Editor, Consumer Reports): One of the concerns is ultimately the cost of service overall not only for T-Mobile customers, but maybe for a lot of wireless customers will go up, with less competition and with the removal from the market of T-Mobile, which often had the lowest rates of the major national carriers.

KAUFMAN: The proposed merger's impact on price competition will be one of the factors that federal anti-trust officials will be reviewing carefully. In announcing this deal, AT&T took pains to describe it as good for consumers. And it already has its talking points lined up. The company says, for example, that in 18 of 20 major markets, there is substantial competition. Here's the company's general council, Wayne Watts.

Mr. WAYNE WATTS (General Counsel, AT&T): When somebody's trying to decide whether they want to buy a wireless device or change their service, let's say Tulsa, Oklahoma, you're sitting in Tulsa, you don't pick up the yellow pages and look for providers in San Francisco. You want to know who provides service in Tulsa, Oklahoma.

And when you look at that and you step back and you say, all right, now, let's take this market by market, how many competitors are there in the market? And that's where you start finding a lot of competitors.

KAUFMAN: The opposition to the proposed merger is likely to be substantial, from consumer groups, cable companies, which are trying to expand their wireless offerings, and from the number three wireless carrier, Sprint. If the deal goes through, it will be very difficult for Sprint to compete effectively.

Forrester's Charles Golvin believes the deal will ultimately be approved. He says it addresses the Obama administration's goal of expanding coverage and of using the existing wireless spectrum more efficiently. But he and others believe that AT&T will be required to make concessions and divestitures to get their giant merger approved.

Wendy Kaufman, NPR News.

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