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Telecom & Wireless

AT&T Buys T-Mobile, Deprives Desperate Sprint

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By Douglas A. McIntyre Updated Published
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Just days after rumors that Sprint-Nextel (NYSE: S) and T-Mobile would merge, AT&T (NYSE: T) bought the Deutsche Telekcom US division of $39 billion. The deal dashes Sprint’s hopes to challenge AT&T Wireless and Verizon Wireless. DT and AT&T said “they have entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction currently valued at about $39 billion. The agreement has been approved by the Boards of Directors of both companies.” Of the total $25 billion will be paid in cash. 24/7 Wall St. recently predicted that T-Mobile would be gone soon when it released its “Ten Brands That Will Disappear in 2011” last June.

AT&T said the transaction would expand its LTE 4-G footprint.

“The number of AT&T shares issued will be based on the AT&T share price during the 30-day period prior to closing, subject to a 7.5 percent collar; there is a one-year lock-up period during which Deutsche Telekom cannot sell shares.”

AT&T Wireless has 93 million subscribers to Verizon Wireless’s 94 million. T-Mobile has 34 million and Sprint 50 million.

The deal leaves the troubled Sprint without a way to escape from its lingering problems. It has lost subscribers in most quarters over the last three years. It has also lost money over the majority of that time. Sprint does not have the leverage to attract Apple’s (NASDAQ: AAPL) iPhone 4 or iPad 2 products which means millions of customers will never chose it as a carrier.

Sprint depends on WiMax 4G which it has built out along with provider Clearwire (NASDAQ: CLWR). AT&T can cement its LTE 4G standard with the T-Mobile deal. Verizon Wireless also used LTE.

Sprint’s situation has gone from troubled to desperate.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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