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AT&T and T-Mobile Acquisition Makes Sense

Posted: 20 Mar 2011 01:46 PM PDT

We had to anticipate some consolidation of our networks in the US at some point in time. It turns out the beginning of that movement has begun as AT&T has agreed to buy T-Mobile for $39 billion dollars from Deutsche Telekom. So what does this mean? Is this bad or good for the telecommunications industry and for consumers as a whole?

What does T-Mobile give AT&T
First of all AT&T will become the largest telecommunications provider in the United States giving them a total customer base of 130 million people. Second it will give AT&T a stronger position with GSM going forward. AT&T has been clear about their 4G path to LTE where T-Mobile hasn’t. There are a number of network migration paths, however the less fragmentation in 4G networks the better for handset manufacturers and network infrastructure providers in general.

When you look at some of the other countries where there is less network technology fragmentation we have tended to see more advancements in their infrastructure. Hopefully with AT&T having a near monopoly of the GSM network in the US we will see more advancements as they seek to standardize future network technologies. We would also hope that this level of standardization would encourage and promote more handset innovation as well.

The Cons of Consolidation
Of course the negative of consolidation is the lack of competition. With AT&T acquiring T-Mobile, they no longer have any real competition in the GSM market. There are network benefits that GSM brings to many consumers who prefer it to CDMA. T-Mobile was in a position to keep the pressure on AT&T with pricing, GSM network technology as well as with the devices themselves.

So would we be surprised if somewhere in the next few years Verizon made a bid for Sprint? Probably not, although it would be mostly for the customer base rather than the network technology. As I said at the beginning, network operator consolidation was expected. Now we will wait to see how it unfolds and how AT&T uses this acquisition to better their networks and keep their prices – as well as the devices that run on their network – competitive.

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AT&T to Acquire T-Mobile USA [What it directly means to me, an Android dude]

Posted: 20 Mar 2011 01:43 PM PDT

In a move that’s epic to say the least, it appears to be official that AT&T has committed to purchase T-Mobile USA from their current owners Deusche Telekom AG. This will be a cash-and-stock transaction that has been valued at right around $39 billion – or 8% of company ownership. This agreement has been approved by the FCC and will be a definite step up the the competition, namely Verizon Wireless who currently heads the US mobile communication market. Will this transition make this team a powerhouse that’ll dominate the market instead? AT&T chairman and CEO Randall Stephenson hopes so, him noting in the press release below that this move will bring LTE to more than 294 million people in the USA.

What this move represents is a boost for AT&T to a whopping 95% of the US population for coverage in their 4G network – this whole situation including a new $8 billion dollar investment by AT&T into infrastructure improvements which will bring higher quality voice and LTE to essentially the entirety of the United States. Another way of looking at this move is that it’ll “directly benefit” an additional 46.5 million US citizens who will soon have access to AT&Ts latest 4G LTE connectivity. As the company notes, this is roughly the size of New York and Texas combined.

Exciting! As evidenced by the massively anticipated addition of Verizon’s application of their LTE network to handsets via their first compatible device, the HTC ThunderBolt, Verizon had what’s been up to this point a basic dominance of the mindshares of mobile awesomeness seeking citizens across the USA. Now if AT&T and T-Mobile do indeed join forces and rack up a giant move toward working knowledge of their own 4G LTE speed network into the brains of those lovers of mobile connectivity in these United States, they may have a winning combination.

And as an added bit of irony, I must say that I personally am in an airport heading off to CTIA 2011 writing this story and posting it using the Inspire 4G on AT&T’s current HSPA+ 4G network. It’s working fantastic where the HTC ThunderBolt has had a bit of a problem connecting. Now this is more than likely a funny fluke as it’s been speeding along every other location I’ve been with it thus far, but the oddity of the moment is just too silly not to note!

Take a peek at the full press release here:

AT&T to Acquire T-Mobile USA from Deutsche Telekom
Provides Fast, Efficient and Certain Solution to Impending Spectrum Exhaust Challenges Facing AT&T and T-Mobile USA in Key Markets Due to Explosive Demand for Mobile Broadband
Enhances Network Capacity, Output and Quality in Near Term for Both Companies' Customers

AT&T Commits to Expand 4G LTE Deployment to an Additional 46.5 Million Americans, Including in Rural, Smaller Communities, for a Total of 294 Million or 95% of the U.S. Population

Provides 4G LTE Service for T-Mobile USA's 34 Million Subscribers
More Than $8 Billion in Incremental Infrastructure Spend by a U.S. Company over Seven Years, Enabling Nation's High-Tech Industry, Innovation and Economic Growth

Creates Substantial Value for AT&T Shareholders Through Large, Straightforward Synergies

DALLAS & BONN, Germany–(BUSINESS WIRE)–AT&T Inc. (NYSE: T) and Deutsche Telekom AG (FWB: DTE) today announced that they have entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction currently valued at approximately $39 billion. The agreement has been approved by the Boards of Directors of both companies.

"every part of America to the digital age."
AT&T's acquisition of T-Mobile USA provides an optimal combination of network assets to add capacity sooner than any alternative, and it provides an opportunity to improve network quality in the near term for both companies' customers. In addition, it provides a fast, efficient and certain solution to the impending exhaustion of wireless spectrum in some markets, which limits both companies' ability to meet the ongoing explosive demand for mobile broadband.

With this transaction, AT&T commits to a significant expansion of robust 4G LTE (Long Term Evolution) deployment to 95 percent of the U.S. population to reach an additional 46.5 million Americans beyond current plans – including rural communities and small towns. This helps achieve the Federal Communications Commission (FCC) and President Obama's goals to connect "every part of America to the digital age." T-Mobile USA does not have a clear path to delivering LTE.

"This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation's future," said Randall Stephenson, AT&T Chairman and CEO. "It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people. Mobile broadband networks drive economic opportunity everywhere, and they enable the expanding high-tech ecosystem that includes device makers, cloud and content providers, app developers, customers, and more. During the past few years, America's high-tech industry has delivered innovation at unprecedented speed, and this combination will accelerate its continued growth."

Stephenson continued, "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."

Deutsche Telekom Chairman and CEO René Obermann said, "After evaluating strategic options for T-Mobile USA, I am confident that AT&T is the best partner for our customers, shareholders and the mobile broadband ecosystem. Our common network technology makes this a logical combination and provides an efficient path to gaining the spectrum and network assets needed to provide T-Mobile customers with 4G LTE and the best devices. Also, the transaction returns significant value to Deutsche Telekom shareholders and allows us to retain exposure to the U.S. market."

As part of the transaction, Deutsche Telekom will receive an equity stake in AT&T that, based on the terms of the agreement, would give Deutsche Telekom an ownership interest in AT&T of approximately 8 percent. A Deutsche Telekom representative will join the AT&T Board of Directors.

Competition and Pricing
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. This intense competition is only increasing with the build-out of new 4G networks and the emergence of new market entrants.

The competitiveness of the market has directly benefited consumers. A 2010 report from the U.S. General Accounting Office (GAO) states the overall average price (adjusted for inflation) for wireless services declined 50 percent from 1999 to 2009, during a period which saw five major wireless mergers.

Addresses wireless spectrum challenges facing AT&T, T-Mobile USA, their customers, and U.S. policymakers.

This transaction quickly provides the spectrum and network efficiencies necessary for AT&T to address impending spectrum exhaust in key markets driven by the exponential growth in mobile broadband traffic on its network. AT&T's mobile data traffic grew 8,000 percent over the past four years and by 2015 it is expected to be eight to 10 times what it was in 2010. Put another way, all of the mobile traffic volume AT&T carried during 2010 is estimated to be carried in just the first six to seven weeks of 2015. Because AT&T has led the U.S. in smartphones, tablets and e-readers – and as a result, mobile broadband – it requires additional spectrum before new spectrum will become available. In the long term, the entire industry will need additional spectrum to address the explosive growth in demand for mobile broadband.

Improves service quality for U.S. wireless customers.

AT&T and T-Mobile USA customers 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. The combination will increase AT&T's network density by approximately 30 percent in some of its most populated areas, while avoiding the need to construct additional cell towers. This transaction will increase spectrum efficiency to increase capacity and output, which not only improves service, but is also the best way to ensure competitive prices and services in a market where demand is extremely high and spectrum is in short supply.

Expands 4G LTE deployment to 95 percent of U.S. population – urban and rural areas.

This transaction will directly benefit an additional 46.5 million Americans – equivalent to the combined populations of the states of New York and Texas – who will, as a result of this combination, have access to AT&T's latest 4G LTE technology. In terms of area covered, the transaction enables 4G LTE deployment to an additional 1.2 million square miles, equivalent to 4.5 times the size of the state of Texas. Rural and smaller communities will substantially benefit from the expansion of 4G LTE deployment, increasing the competitiveness of the businesses and entrepreneurs in these areas.

Increases AT&T's investment in the U.S.

The acquisition will increase AT&T's infrastructure investment in the U.S. by more than $8 billion over seven years. Expansion of AT&T's 4G LTE network is an important foundation for the next wave of innovation and growth in mobile broadband, ensuring the U.S. continues to lead the world in wireless technology and availability. It makes T-Mobile USA, currently a German-owned U.S. telecom network, part of a U.S.-based company.
An impressive, combined workforce

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.
Consistent with AT&T's track record of value-enhancing acquisitions
AT&T has a strong track record of executing value-enhancing acquisitions and expects to create substantial value for shareholders through large, straightforward synergies with a run rate of more than $3 billion, three years after closing onward (excluding integration costs). The value of the synergies is expected to exceed the purchase price of $39 billion. Revenue synergies come from opportunities to increase smartphone penetration and data average revenue per user, with cost savings coming from network efficiencies, subscriber and support savings, reduced churn and avoided capital and spectrum expenditures.

The transaction will enhance margin potential and improve the company's long-term revenue growth potential as it benefits from a more robust mobile broadband platform for new services.

Additional financial information
The $39 billion purchase price will include a cash payment of $25 billion with the balance to be paid using AT&T common stock, subject to adjustment. AT&T has the right to increase the cash portion of the purchase price by up to $4.2 billion with a corresponding reduction in the stock component, so long as Deutsche Telekom receives at least a 5 percent equity ownership interest in AT&T.

The number of AT&T shares issued will be based on the AT&T share price during the 30-day period prior to closing, subject to a 7.5 percent collar; there is a one-year lock-up period during which Deutsche Telekom cannot sell shares.

The cash portion of the purchase price will be financed with new debt and cash on AT&T's balance sheet. AT&T has an 18-month commitment for a one-year unsecured bridge term facility underwritten by J.P. Morgan for $20 billion. AT&T assumes no debt from T-Mobile USA or Deutsche Telekom and continues to have a strong balance sheet.

The transaction is expected to be earnings (excluding non-cash amortization and integration costs) accretive in the third year after closing. Pro-forma for 2010, this transaction increases AT&T's total wireless revenues from $58.5 billion to nearly $80 billion, and increases the percentage of AT&T's total revenues from wireless, wireline data and managed services to approximately 80 percent.

This transaction will allow for sufficient cash flow to support AT&T's dividend. AT&T has increased its dividend for 27 consecutive years, a matter decided by AT&T's Board of Directors.

Conditions
The acquisition is subject to regulatory approvals, a reverse breakup fee in certain circumstances, and other customary regulatory and other closing conditions. The transaction is expected to close in approximately 12 months.

Advisors
Greenhill & Co., J.P. Morgan and Evercore Partners acted as financial advisors and Sullivan & Cromwell LLP, Arnold & Porter, and Crowell & Moring provided legal advice to AT&T.

Conference Call/Webcast
On Monday, March 21, 2011, at 8 a.m. ET, AT&T Inc. will host a live video and audio webcast presentation regarding its announcement to acquire T-Mobile USA. Links to the webcast and accompanying documents will be available on AT&T's Investor Relations website. Please log in 15 minutes ahead of time to test your browser and register for the call.
For dial-in access, please dial +1 (888) 517-2464 within the U.S. or +1 (630) 827-6816 outside the U.S. after 7:30 a.m. ET. Enter passcode 8442095# to join or ask the conference call operator for the AT&T Investor Relations event.

The webcast will be available for replay on AT&T's Investor Relations website on March 21, 2011, starting at 12:30 p.m. ET through April 21, 2011. An archive of the conference call will also be available during this time period. To access the recording, please dial +1 (877) 870-5176 within the U.S. or +1 (858) 384-5517 outside the U.S. and enter reservation code 29362481#.

Transaction Website
For more information on the transaction, including background information and factsheets, visit www.MobilizeEverything.com.

About AT&T
AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates – AT&T operating companies – are the providers of AT&T services in the United States and around the world. With a powerful array of network resources that includes the nation's fastest mobile broadband network, AT&T is a leading provider of wireless, Wi-Fi, high speed Internet, voice and cloud-based services. A leader in mobile broadband and emerging 4G capabilities, AT&T also offers the best wireless coverage worldwide of any U.S. carrier, offering the most wireless phones that work in the most countries. It also offers advanced TV services under the AT&T U-verse® and AT&T │DIRECTV brands. The company's suite of IP-based business communications services is one of the most advanced in the world. In domestic markets, AT&T Advertising Solutions and AT&T Interactive are known for their leadership in local search and advertising.

Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at http://www.att.com. This AT&T news release and other announcements are available at http://www.att.com/newsroom and as part of an RSS feed at www.att.com/RSS. Or follow our news at @ATT.

About Deutsche Telekom
Deutsche Telekom is one of the world's leading integrated telecommunications companies with around 129 million mobile customers, approximately 36 million fixed-network lines and more than 16 million broadband lines (as of December 31, 2010). The Group provides products and services for the fixed network, mobile communications, the Internet and IPTV for consumers, and ICT solutions for business customers and corporate customers. Deutsche Telekom is present in over 50 countries and has around 247,000 employees worldwide. The Group generated revenues of EUR 62.4 billion in the 2010 financial year – more than half of it outside Germany (as of December 31, 2010).

About T-Mobile USA
Based in Bellevue, Wash., T-Mobile USA, Inc. is the U.S. wireless operation of Deutsche Telekom AG. By the end of the fourth quarter of 2010, approximately 129 million mobile customers were served by the mobile communication segments of the Deutsche Telekom group – 33.7 million by T-Mobile USA – all via GSM and UMTS, the world's most widely used digital wireless standards. Today, T-Mobile operates America's largest 4G network, and is delivering a compelling 4G experience across a broad lineup of leading devices in more places than competing 4G services. T-Mobile USA's innovative wireless products and services empower and enable people to stay connected and productive while mobile. Multiple independent research studies continue to rank T-Mobile USA as a leader in customer care and customer satisfaction. For more information, please visit http://www.T-Mobile.com. T-Mobile is a federally registered trademark of Deutsche Telekom AG. For further information on Deutsche Telekom, please visit www.telekom.de/investor-relations.

Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. In addition to these factors, there are risks and uncertainties associated with the T-Mobile business, the pendency of the T-Mobile acquisition and the ability to realize the benefits of the integration of the T-Mobile business. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's website at www.att.com/investor.relations.

© 2011 AT&T Intellectual Property. All rights reserved. Mobile broadband not available in all areas. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies.

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AT&T Acquires T-Mobile for $39 Billion

Posted: 20 Mar 2011 01:11 PM PDT

AT&T has announced its intent to acquire T-Mobile from Deutsche Telekom for a price tag of $39 Billion US dollars. The deal is expected to take 12 months to close but will help AT&T leapfrog Verizon as the largest cellular provider in the US.

AT&T also through this acquisition will look to build out the most expansive LTE network in the US. The press release sites one of the goals of the acquisition as being “to provide an optimal combination of network assets to add capacity sooner than any alternative, as well as provide an opportunity to improve network quality in the near term for both companies’ customers.”

Another highlight of the release is AT&T’s CEO and Chairman Randall Stephenson saying “[the acquisition] will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people. Mobile broadband networks drive economic opportunity everywhere, and they enable the expanding high-tech ecosystem that includes device makers, cloud and content providers, app developers, customers, and more. During the past few years, America’s high-tech industry has delivered innovation at unprecedented speed, and this combination will accelerate its continued growth.”

We will have to see if this is good news or bad news as consolidation cuts down on competition and isn’t always good news for consumers.

[Source Android Community]

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SlashGear Weekly Roundup Video: March 20, 2011

Posted: 20 Mar 2011 12:37 PM PDT

This week’s tech news is topped by our HTC Thunderbolt review along with product announcements from Samsung, new pricing and availability for the Motorola XOOM WiFi-only version, subscription service changes with the New York Times and The Daily, a new live TV streaming Time Warner Cable iPad app, BlackBerry 6 security problem, rumored G2X and G-Slate dates, review of the Infinity Blade iPad 2 game, and unboxing of the HTC Arrive.

10. Sprint’s first Windows Phone 7 device, the HTC Arrive, hands-on and unboxing.

9. The Motorola XOOM WiFi-only version arriving March 27 and priced at $599.

8. Samsung product announcements:
– Galaxy Players 4 and 5
– Series 2, 4, and 6 notebooks
– Series 9 ultraportable
– Samsung 3D HDTV Monitors TA750 and TA950

7. Time Warner Cable launches live TV streaming iPad app to high demand.

6. RIM warns BlackBerry 6 users to disable JavaScript due to security issue with the new BlackBerry Browser.

5. The New York Times and The Daily both announce paywalls starting within the next two weeks.

4. The T-Mobile G2X and G-Slate are rumored to launch on April 20th.

3. The WiFi-only Dell Streak 7 now available for pre-order on Amazon.

2. Review of Infinity Blade game for iPad 2.

1. HTC Thunderbolt review.

Giveaways:
1. Wrapsol
2. StealthArmor

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SlashGear Week in Review – Week 12 2011

Posted: 20 Mar 2011 07:18 AM PDT

Another week in the history books and another Week in Review for you to check out. We started the week last week with the alarms not working on older OS versions of the iPhone. At least the alarms were an hour early and not an hour late. The only fix for me was updating to the latest version of the OS. Terminix and its ad agency created a billboard in Dallas last week using thousands of live roaches. The board was designed to warn people of the germs roaches carry and to set an example to all the roaches watching of what can happen if they come into your home.

Analysts claim that Apple sold a million iPad 2 tablets last week. Best Buy is said to have sold out in ten minutes. The Japanese market Prius will get an option for lithium ion battery packs. A cheaper model will continue to use the nickel metal hydride batteries that all other markets have no other choice over.

AT&T announced intentions to put data limits on its U-verse and DSL plans for home users. The limits are 150GB for DSL and 250GB for U-verse. Time Warner Cable launched a new iPad app that is the first ever to play live TV. The app launched last week for subscribers only and it will only work in the home.

We went hands-on with the iPad 2 and unboxed it on Monday. Burns tried to set a world record for waiting the longest to open his and couldn’t last. An awesome DIY pinball machine using dual LCDs and some other tech surfaced. The emulator software lets you play all sorts of old school pinball machines.

Apple is taking peoples old iPads and donating them to Teach for America. You get no money for your donated tablet, but you may be able to take it as a tax deduction. A cool bottle opener concept turned up mid-week that has a handle that is a bottle and holds the caps after you pop them off your frosty beverage. Who knows if it will ever hit the market.

Some hints at the price of the Sony NGP turned up this week thanks to an Ubisoft sponsored survey. The 3G version was pegged at $350 and the WiFi only at $250. The iPad 2 was gifted with its inevitable Will it Blend treatment this week. Naturally, it would blend.

An EA boss has hinted that we might see a new Wii 2 at E3 this year. E3 isn't that far away and this is the first hint we have heard of the console so I think this is dubious. On the other hand Nintendo is hurting on the profit side and a new console would help them greatly, so who knows. The military has some apps for Android and iOS devices in the works that will allow soldiers on the ground to control the camera on a drone in the air. The apps would allow the solider to see where enemies are and to find weapons caches more easily and safely.

Pepsi showed off a new green bottle that will go into testing soon. The bottle is made from plant material that would have otherwise been thrown away. Western Digital offered up a new and massive capacity My Book Studio Edition II External HDD. This drive has a massive 6TB of storage inside.

Apple tweaked it stock system in retail stores according to some reports. The tweak allowed workers to tell people that the iPad 2 was out of stock even if it wasn't so they would have tablets to sell the next day. We have now heard that the iPhone 5 will have NFC tech and that it won’t have NFC tech. I think that we won’t know until Steve pulls the thing out of his pocket in June.

Scientists studying Titan, the largest moon of Saturn, have found evidence of heavy precipitation on the moon. Rather than water, it’s raining liquid methane on Titan. A geek found Friday that the magnets in the iPad 2 SmartCover were strong enough to stick the tablet to his fridge. I would worry constantly that it would crash to the floor. A new Samsung LCD for computers with a 27-inch screen turned up this week. The screen uses UWB tech needing no wire between the computer and the screen for video.

Optometrists have approved the Nintendo 3DS for use by kids under six. Nintendo had previously stated they should not play the console for long periods because it could damage their young eyes. It surfaced this week that way back in 2000 the Google founders wanted Steve Jobs to run the show as CEO. Jobs was at the time just back to Apple and hard at work in the iPod so Google went with Schmidt instead.

Friday we posted up our review of the HTC Thunderbolt. We found that the smartphones performance was sub-par thanks to its weaker dual-core processor. Did you see the gigantic moon last night? We mentioned yesterday that it was the moons closest position to the Earth, which is why it looked so gigantic. Thanks for reading this week’s edition, see you next time!

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