AT&T plans to acquire T-Mobile for $39 billion

AT&T plans to acquire T-Mobile USA from Deutsche Telekom AG for a cool $39 billion.

The lucrative deal will supposedly improve network quality for both carriers, while offering a “fast, efficient and certain solution” to the “impending” exhaustion of wireless spectrum in certain markets.

“This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future,” explained AT&T CEO Randall Stephenson. 

“[For example], it will bring advanced LTE capabilities to more than 294 million people. [In addition], 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 and customers.”

Of course, it remains unclear if the U.S. government will expedite the deal, as AT&T requires the FCC’s approval to acquire T-Mobile’s spectrum licenses.

The acquisition is also likely to face quite a bit of scrutiny by the US Department of Justice (DoJ), which will undoubtedly express concern over various antitrust issues.

Indeed, Herbert Hovenkamp, a law professor at the University of Iowa, believes the deal will have a difficult time meeting new merger guides stipulated by the DoJ.

“It’s a pretty highly concentrated market,” Hovenkamp told MarketWire.

“The guidelines would say this is a highly questionable merger unless there is a significant provable efficiency. This will get fairly close scrutiny.”

Credit Suisse analyst Jonathan Chaplin expressed similar sentiments.

“We have never seen a deal with more regulatory risk be attempted in the U.S.,” Chaplin wrote in a research note. 

“It is unlikely that AT&T would attempt a deal that they knew would fail; however, we can’t see how they would get this through without massive divestitures and concessions.”