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AT&T Buys T-Mobile for $39B: And Then There Were Three

And then there were three...wireless carriers, that is. AT&T is buying T-Mobile USA from Deutsche Telecom for $39 billion ($25 billion in cash and the balance in stock). The surprise deal will combine the second and fourth largest wireless carriers and perhaps of great importance to consumers, shrink the number of large wireless providers to three.

The AT&T/T-Mobile marriage will create the largest network in the US with 129.2 million subscribers, making it larger than Verizon Wireless which has 101.1 million and about twice the size of third place Sprint/Nextel. Maybe the shotgun marriage occurred as a result of Verizon finally nailing down the iPhone, but at the end of the day all consumers want to know is this: how will this new combination change my life?

If you are a Verizon or Sprint user, not at all. If you are a T-Mobile customer, things might not change all that much, because the two companies use the same GSM technology. AT&T and T-Mobile say that their combination will help alleviate shortage problems that occur on both networks. From their lips...we'll see about that promised improvement.

I never feel good when there is less competition for consumer dollars, which means that I don't feel good about a lot of M&A deals that occur. This one has a ways to go, because government regulators at the Federal Communications Commission are clearly going to weigh and determine whether the deal can pass muster. Last May, an FCC study failed to conclude that the wireless industry is "effectively competitive".

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