Tuesday 21 February 2017

AT&T to buy T-Mobile USA from Deutsche Telekom in $39bn move

Paritosh Bansal

Published 21/03/2011 | 05:00

AT&T Inc said last night that it would buy Deutsche Telekom AG to acquire T-Mobile USA in a $39bn (€27.5bn) cash-and-stock transaction that would create a new industry behemoth by combining two of the four largest US wireless carriers.

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The purchase price includes a cash payment of $25bn, with the outstanding balance to be paid using AT&T common stock. AT&T has the right to increase the cash portion of the purchase price by up to $4.2bn.

As part of the deal, Deutsche Telekom will get about 8pc stake in AT&T, and a Deutsche Telekom representative will join the AT&T board.

Cash component

AT&T can increase the cash component so long as Deutsche Telekom receives at least a 5pc equity stake in it.

The agreement has been approved by the boards of both companies.

AT&T said it would finance the cash portion with new debt and cash on AT&T's balance sheet. The US company has an 18-month commitment for a one-year unsecured bridge term facility underwritten by JPMorgan Chase & Co for $20bn. AT&T will not assume any debt from T-Mobile USA or Deutsche Telekom.

AT&T said the deal is expected to be accretive to earnings, excluding non-cash amortisation and integration costs, in the third year after the deal closing. The deal -- which will add 33 million subscribers to AT&T's already dominant position in the US -- is expected to close in about 12 months.

Irish Independent

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