AT&T plans to acquire T-Mobile in $39B deal, making telecom giant

AT&T announced Sunday it has sealed an agreement to buy T-Mobile USA from Deutsche Telekom in a move that is sure to garner intense scrutiny from antitrust and telecom regulators.

The $39 billion deal represents a strong move toward consolidation in an industry where four companies already control more than 90 percent of the market. If the deal goes through, it’ll be three. 

{mosads}In its announcement, AT&T signaled it will align with federal calls for universal broadband as it defends the deal in Washington: “[The acquisition] helps achieve the Federal Communications Commission (FCC) and President Obama’s goals to connect ‘every part of America to the digital age.’ “

The company also stressed how the acquisition will benefit consumers as it seeks to upgrade its network. “It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people,” said AT&T chief executive Randall Stephenson in a release. 

AT&T has been pilloried over the last few years as iPhone users complain that their service grinds to halt when they try to connect from major cities. The company is also working to acquire Qualcomm spectrum for $1.93 billion.

The transaction will require Justice Department scrutiny on antitrust grounds and FCC public interest approval due to the transfer of spectrum licenses.

The door is open for the merger to be entirely blocked, and many Democrats on Capitol Hill can be expected to make that case. 

Energy and Commerce ranking member Henry Waxman (D-Calif.) and Senate Commerce Chairman Jay Rockefeller (D-W.Va.) have each expressed serious concerns about consolidation in the wireless industry. 

The deal follows reports that Sprint was in talks to merge with T-Mobile in order to better compete with the nation’s two largest wireless carriers, AT&T and Verizon. Sprint is on a separate wireless standard, whereas AT&T and T-Mobile are on the same standard, making the merger technically simpler.

Consensus among analysts said the government might approve the rumored Sprint/T-Mobile merger on the grounds of providing a competitive offset to AT&T and Verizon.