AT&T to give T-Mobile spectrum, roaming deal

T-Mobile USA will receive spectrum licenses in 128 U.S. markets and a seven-year roaming agreement that will expand its reach by 50 million potential subscribers. This is in addition to $3 billion in cash after AT&T dropped its deal to merge with T-Mobile.

Deutsche Telekom, T-Mobile’s parent company, disclosed the terms of the breakup agreement after AT&T killed the merger deal on Monday. Deutsche Telekom said it agreed with AT&T that opposition by the U.S. Department of Justice and Federal Communications Commission had made it unlikely that the deal would be completed, even with concessions.

The two companies proposed the $39 billion merger in March but faced opposition from the two key federal agencies, as well as rival carriers and some state attorneys general, on the grounds that the deal would decrease competition and raise prices for mobile subscribers. AT&T had said the transaction would be necessary to meet growing demand for mobile broadband coverage.

AT&T will give T-Mobile blocks of Advanced Wireless Services (AWS) spectrum in 128 cellular market areas, including 12 of the 20 largest in the U.S., Deutsche Telekom said. The carrier will gain spectrum in San Francisco, Boston, Atlanta, Washington, Los Angeles, Dallas, Seattle, and other metropolitan areas, which should help it to serve more subscribers with higher speeds.

In addition, T-Mobile will enter into a seven-year roaming agreement with AT&T, which Deutsche Telekom said would allow T-Mobile to reach areas where it has not had a high-speed network or a roaming arrangement until now. With the roaming deal, T-Mobile will reach 280 million U.S. residents, up from the current 230 million.

Deutsche Telekom expects to receive the $3 billion payment by the end of this year. The company said the activation of the breakup deal, which it called one of the largest in history, did not affect its profit forecast for its 2011 financial year.

[Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen’s email address is stephen_lawson@idg.com.]

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