T-Mobile has 129 million mobile customers, approximately 36 million fixed-network lines, and over 16 million broadband lines.
AT&T says the deeal will allow it to improve capacity and network quality for customers, including providing what AT&T called an "efficient and certain solution to the impending exhaustion of wireless spectrum in some markets."
That is a pitch tailor-made for an FCC concerned about a growing spectrum crunch. Also calculated to please the FCC and Obama administration, AT&T has promised to expand 4G service to an additional 46.5 million people including rural and smaller communities. That would bring the total 4G deployment to 95% of the population, or exactly what the Obama administration has made a goal in its national wireless plan unveiled in the President's State of the Union speech.
"This transaction delivers significant customer, shareowner and public benefits that are available at this level only from the combination of these two companies with complementary network technologies, spectrum positions and operations," said Randall Stephenson, AT&T Chairman and CEO. "We are confident in our ability to execute a seamless integration, and with additional spectrum and network capabilities, we can better meet our customers' current demands, build for the future and help achieve the President's goals for a high-speed, wirelessly connected America."
Both boards have approved the deal, which still must get regulatory approval.
The deal is $25 billion cash, with the rest in AT&T common stock. J.P. Morgan is providing $20 billion of that cash. AT&T is looking at about a year to secure government approvals and close the deal.
Bernstein Research said the deal faces a high government hurdle--it is a combination of one of the top four competitors in a wireless market that Bernstein says is essentially a duopoly already. The analysts there do not expect Verizon to make a play for Sprint, which would combine the other two of the top four.
Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.) said Commerce will review the deal and that the FCC should leave "no Stone unturned" in vetting it. In a statement Sunday, the senator said that was essential because "[w]ith every passing day, wireless services are becoming more and more important to the way we communicate."
Media consolidation critics were quick to criticize the deal. Public Knowledge called it "unthinkable," while Free Press said it was a sign of "runaway consolidtion" in the wireless market and Media Access Project said it would increase prices and decrease choices.
FCC Commissioner Meredith Attwell Baker, who has called for reforms of the government's merger-review process, said she hoped that the FCC's review "will be careful, timely and focused on competitive issues directly related to the proposed transaction."