T-Mobile USA sold to AT&T for $39 billion

[NEP]

After months of rumors about its fate, Bellevue-based T-Mobile USA was sold today to AT&T for $39 billion in a deal that's reshaping the wireless industry as it begins delivering a new generation of services and devices.

If the deal is approved by regulators, AT&T will become the nation's largest wireless carrier by a significant margin, leapfrogging Verizon Wireless and extending its upcoming mobile broadband network to 95 percent of the population.

Until the deal closes next year, customers of T-Mobile and AT&T should be unaffected and no, T-Mobile isn't getting the iPhone just yet.

The long-term fate of T-Mobile employees is unclear but AT&T pledged to maintain a large footprint in the Seattle area where the U.S. wireless industry was spawned. A spokesman said AT&T will keep its headquarters in Dallas but "we plan to maintain a significant presence in Seattle."

There was speculation in recent weeks that T-Mobile - the fourth-place carrier - would merge with third-place Sprint and perhaps Kirkland-based Clearwire, improving Sprint's position against the largest two carriers, AT&T and Verizon.

But instead AT&T's bulking up for its intensifying competition with Verizon, acquiring T-Mobile from parent Deutsche Telekom for $25 billion in cash and plus $14 billion worth of stock in a deal they expect to close in early 2012.

Deutsche Telekom will end up as AT&T's largest shareholder with 8 percent of the Dallas-based company.

AT&T will use T-Mobile's spectrum and network of towers to improve the quality of its service, which has been a sore point since it was burdened by heavy data usage of iPhone users starting in 2007. It also settles for good the question of which "fourth generation" network T-Mobile will pursue, since its customers will now have access to the LTE technology that AT&T's developing.

"This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation's future," Randall Stephenson, AT&T chairman and chief executive, said in the release. "It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people."

Deutsche Telekom will use the proceeds to pay down debt and build up its position in Europe.

"We have achieved the best solution for our company, our customers and shareholders," DT Chief Executive Rene Obermann said in a release. "This will strengthen our position in Europe, whilst we are still participating in the rapidly growing business of mobile data. We will be able to focus more on the opportunities of a modern infrastructure in Germany and Europe, as well as in Internet products that accompanies to our strategy 'fix, transform and innovate.'"

T-Mobile and AT&T were already distant cousins. AT&T descended from the McCaw family cellular phone companies formed in the 1980s, and T-Mobile was previously VoiceStream Wireless, a company started by McCaw veteran John Stanton.

Deutsche Telekom paid around $30 billion for VoiceStream, which it turned into T-Mobilee USA. The deal was similarly announced on a Sunday, in 2000, and was initially valued at $50.7 billion but fell in value before it closed in 2001.

Together the companies employ around 8,500 people on the Eastside, but the overlapping administrative positions mean some cuts are likely, not to mention the duplicate stores operated across the country.

AT&T didn't specify what will happen to T-Mobile employees but its release implies that it intends to maintain T-Mobile staff and its large concentration of employees in the Seattle area. An excerpt:


Bringing AT&T and T-Mobile USA together will create an impressive workforce that is best positioned to compete in today's global economy. Post-closing, AT&T intends to tap into the significant knowledge and expertise held by employees of both AT&T and T-Mobile USA to succeed. AT&T is the only major U.S. wireless company with a union workforce, offering leading wages, benefits, training and development for employees. The combined company will continue to have a strong employee and operations base in the Seattle area.


The AT&T spokesman said the company is still developing its "synergy plan" but the deal is intended to spur growth and create more opportunities for employees.

"We share similar spectrum so there's a lot of positive knowledge we're looking forward to tapping into," he said. "Any reduction we anticipate will come through natural attrition. The bulk of the cost synergies are going to come through procurement and operational scale. That's how we view the cost side of this."

By acquiring T-Mobile, AT&T's effort to expand its network leaps ahead. It also means that customers of the combined company will have access to both the current 3G network and AT&T's new ultrafast fourth-generation LTE network as it comes online.

It's acquiring 33.7 million T-Mobile customers, T-Mobile's wireless spectrum and T-Mobile's collection of cell sites.

AT&T's market share will jump from about 33 percent to 43 percent with T-Mobile folded in. Verizon has around 35 percent of the wireless market.

Obtaining regulatory approval will be a challenge. The companies may be forced to divest markets, letting go some subscribers, to obtain approval, industry consultant Chetan Sharma said.

"I don't see them approving as is," he said, predicting that "it will be a long, drawn process in terms of analysis to see if this makes it less or more competitive."

AT&T is apparently anticipating the scrutiny. In its release, it asserted that market competition is "escalating" and consumers have multiple wireless options:


"The U.S. wireless industry is one of the most fiercely competitive markets in the world and will remain so after this deal. The U.S. is one of the few countries in the world where a large majority of consumers can choose from five or more wireless providers in their local market. For example, in 18 of the top 20 U.S. local markets, there are five or more providers. Local market competition is escalating among larger carriers, low-cost carriers and several regional wireless players with nationwide service plans."


AT&T said customers of both companies "will see service improvements - including improved voice quality - as a result of additional spectrum, increased cell tower density and broader network infrastructure. At closing, AT&T will immediately gain cell sites equivalent to what would have taken on average five years to build without the transaction, and double that in some markets."

In an advisory note on its site, T-Mobile said customers will see no changes in service or rates until after the deal closes. T-Mobile phones will continue to work, and the company also said it will also honor multi-year contracts that extend beyond the takeover.

T-Mobile's statement said the merger "will ensure the deployment of a robust 4G LTE network to 95% of the U.S. population, something neither company would achieve on its own. Also, because of our compatible networks and spectrum, the customers of T-Mobile USA and AT&T will experience improved voice and data service almost immediately after the networks are integrated."

None of the integration work will begin until regulators approve the deal, though.

The Seattle Times

[NEP]

Bad news, hy vọng tòa án không cho 2 công ty này nhập với nhau.

[NEP]

Update: T-Mobile has posted an update on their website about what the merger means for its customers. The company says T-Mobile USA will continue to operate as an independent company until the acquisition is complete (expected in approximately 12 months). It reiterates that both companies working together can provide 95% of the United States with 4G LTE, which would be near impossible for each company respectively. T-Mobile says they will "honor all contracted plans that are entered into before the change of ownership."

[NBT]

hy vọng là tmobile nó ko đóng cửa, AT&T and Verizon is so expensive, almost double the price of T-Mobile

[NEP]

AT&T mua T-Mobile, nếu mà được tòa án chấp thuận thì chắc AT&T sẽ đóng cửa T-Mobile để thâu hết khách của T-Mobile vào AT&T... Nếp hy vọng là chuyện này sẽ không được tòa án chấp thuận vì plan của AT&T đắt quá, I just want a basic phone plan to make call...

[NBT]

nếu mà nếp muốn basic thì có thể dùng metroPCs (ko biết bên nếp có ko) only $50/month unlimited call, text, web

[NEP]

$50/month hơi nhiều đó, especially since I only make couple phone calls a month, can live without texting và web surfing. Nếu cái deal này go through and AT&T increases T-Mobile price plan I might just get a prepaid phone card until I really need a cell phone.

[NBT]

Deutsche Telekom to receive 39 billion USD for T-Mobile USA
Deutsche Telekom: U.S. Deal Accelerates Own Transformation

Dallas, Texas and Bonn, Germany — Mar. 20, 2011 PDT
AT&T T-Mobile

* Deutsche Telekom to receive 39 billion USD for US-business
* Deutsche Telekom to have up to 8 percent stake in the leading US telecommunications company
* AT&T takes over US mobile business from Deutsche Telekom
* Deutsche Telekom will receive 25 billion USD in cash and 14 billion USD in AT&T shares
* Attractive multiple of 7.1 times 2010 adjusted EBITDA
* Deutsche Telekom plans to use approximately 5 billion EUR for share buybacks
* Deutsche Telekom net debt is planned to be reduced by approximately 13 billion EUR or 31 percent

Deutsche Telekom will take an approximately 8 percent stake in US telecommunication company AT&T. At the same time Deutsche Telekom will hand over 100 percent ownership of T-Mobile USA to AT&T. This has been agreed by the boards of the two companies today. AT&T will pay 25 billion USD in cash for T-Mobile USA, in addition to 14 billion USD in AT&T shares. AT&T has the right to increase the portion of the purchase price paid in cash by up to 4.2 billion USD with a corresponding reduction in the stock component. The value of the transaction will be 39 billion USD. This will amount to an attractive multiple of approximately 7 times 2010 adjusted EBITDA. The merger still needs US regulatory approval. The closing of the transaction is expected to be completed in first half of 2012.

René Obermann, CEO Deutsche Telekom: “We have achieved the best solution for our company, our customers and shareholders. This will strengthen our position in Europe, whilst we are still participating in the rapidly growing business of mobile data. We will be able to focus more on the opportunities of a modern infrastructure in Germany and Europe, as well as in Internet products that accompanies to our strategy “fix, transform and innovate”. Following our initiatives of finding a solution for our activities both in the United Kingdom and Poland, we have with this transaction nearly accomplished the “fix” part of our strategy. We will now focus our resources more on the “transform” and “innovate” blocks of our strategy in order to accelerate the transformation of Deutsche Telekom.”

Timotheus Höttges, CFO Deutsche Telekom: “As the biggest single share holder of AT&T we will also significantly benefit from their strong dividend. With the excellent result of this transaction we will be able to continue to develop our company. At the same time we will be able to reduce our debts and initiate one of the biggest share buy back programs in both Germany as well as in the European telecommunication industry.”

Deutsche Telekom is planning to reduce its debt by approximately 13 billion EUR. Approximately 5 billion EUR are planned to be used for share buybacks after closing and required resolutions in accordance with the legal requirements.

Randall Stephenson, CEO and Chairman AT&T: “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. 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.”

For Deutsche Telekom the transaction after closure will provide amongst others a consolidation of the balance sheet. Pro forma the ratio for net debt to adjusted EBITDA in 2010 will be reduced to 1.9x from 2.2x, a reduction of 31 percent.

There will be no change regarding the shareholder remuneration policy which has been set for three years. As has been provided within the legal guidelines, Deutsche Telekom will continue with its plans to pay out 3.4 billion EUR on an annual basis consisting of a minimum dividend of 70 cents plus share-buybacks. The share buybacks amounting to approximately 5 billion EUR, which are planned after the closure of the transaction, will come on top of this.

The Guidance for 2011 remains unchanged. For the financial year 2011 Deutsche Telekom expects an adjusted EBITDA of around 19.1 billion EUR. The free cash flow is expected to be stable to slightly growing from the 2010 level of 6.5 billion EUR.

Deutsche Telekom is to receive one seat on AT&T’s Board of Directors.

Morgan Stanley acted as lead financial advisor and issued a fairness opinion to the supervisory board of Deutsche Telekom. Deutsche Bank and Credit Suisse acted as financial advisors for Deutsche Telekom.

Deutsche Telekom was advised by Wachtell, Lipton, Rosen & Katz (M & A, N.Y.C) as well as Cleary Gottlieb and Wiley Rein (antitrust and regulatory law, Washington D.C.).


source: http://newsroom.t-mobile.com/article...es-tmobile-USA

[NBT]

good bye T-Mobile