What does AT&T do to compete with Verizon Wireless? It buys T-Mobile USA for $39 billion in cash and stock, that's what. The two companies have entered into a "definitive agreement" for the acquisition that has been approved by the boards of both companies. The move comes at a time when demand for mobile broadband in the U.S. is strong, strengthening AT&T's ability to meet the demand. The deal gives Deutsche Telekom, owner of T-Mobile, an 8 percent ownership stake in AT&T.
AT&T is in the process of building out its LTE network to compete with that of Verizon, and expects the T-Mobile infrastructure to help that process. T-Mobile has no clear path to LTE, so the merger is a good fit for it. T-Mobile customers should finally be able to get the iPhone after the deal.
The acquisition is subject to approval of the government, and is expected to be complete in 12 months.