AT&T’s planned acquisition of T-Mobile USA will advance U.S. leadership in mobile data and improve consumers’ wireless experience, the company’s top executives said on a conference call Monday morning.
$39 billion acquisition, announced Sunday, would form the nation’s largest mobile operator and reduce the number of big national carriers from four to three. It still faces regulatory review by the U.S. Federal Communications Commission and Department of Justice and is not expected to close for another 12 months.
Together, the two companies say they will be able to deploy a fast LTE (Long Term Evolution) network to 46.5 million more U.S. residents than they could have reached separately, covering 95 percent of the U.S. population.
“This infrastructure will be a competitive advantage for the U.S. for many years to come,” said Randall Stephenson, AT&T’s chairman and CEO. “We’re making a commitment to further America’s leadership for the next wave of innovation and leadership in mobile broadband.” The U.S. leads the world in mobile broadband subscribers, smartphone sales and mobile app downloads, Stephenson said.
AT&T expects the FCC and DOJ to look closely at the deal and believes it will have to discuss divesting some assets to gain approval, said Wayne Watts, senior executive vice president and general counsel.
“We very carefully considered every aspect thoroughly and concluded that this deal can and should be approved,” Watts said.
The FCC will determine whether the deal is in the public interest, and the DOJ will judge whether it adversely affects competition. AT&T contends that competition is strong and growing stronger, with the recent entry of WiMax operator Clearwire and the planned launch of the LightSquared satellite-LTE network. Despite the size advantage AT&T and rival Verizon Wireless have over Sprint Nextel and smaller national and regional carriers, consumers in most individual markets have several choices, AT&T says.
“Competition is vibrant and will only increase after this transaction,” Watts said.
Until the deal is approved, AT&T and T-Mobile will continue to compete as they have been, the executives said. Then, the networks and services will be merged in a gradual process that will include equipping cell sites to carry both carriers’ frequencies and making all AT&T devices—including
Apple products—available to T-Mobile customers, according to Ralph de la Vega, president and CEO of AT&T Mobility and Consumer Markets.
Though some cell sites will be taken down as part of the consolidation, the net effect will be more dense coverage, said John Stankey, president and CEO of AT&T Business Solutions, who also has responsibility for networks. For example, AT&T estimates coverage density will increase by between 25 percent and 35 percent in both San Francisco and New York.
“Greater density drives better performance and greater capacity to serve the accelerating data demand, and customers will see a difference. Their experience will improve,” Stankey said.
At the heart of the deal was the need for greater spectrum to make all this network expansion possible to keep up with booming mobile data volume that has grown by 8,000 percent over the past four years, according to AT&T.
“It lets us get more spectral capacity in the market sooner than any other industry alternative,” Stankey said.