The deal would make AT&T the nation's largest wireless carrier by a wide margin, so it will probably face significant government scrutiny, and AT&T could have to make some big concessions.
Or the deal could be blocked completely — last year was the first year that the FCC did not conclude the U.S. wireless industry was "competitive." The companies expect the deal to close in "approximately 12 months"—a long time.
At the end of 2010, AT&T had 95.5 million wireless subscribers and T-Mobile had 33.7 million subscribers, for a combined total of 129.2 million subscribers. Verizon Wireless had 94.1 million wireless customers.
There had been reports that Sprint, the no. 3 biggest carrier, was looking at buying T-Mobile. But AT&T has obviously made a better offer, and now Sprint may have to get absorbed by Verizon, Comcast, or someone else.
The benefits to T-Mobile customers will be faster access to LTE wireless — true 4G — and potentially faster access to Apple's iPhone.
Combining AT&T and T-Mobile makes more sense technically, too, as the companies share a common wireless technology, while T-Mobile and Sprint use different technologies.
This is a huge deal that, if allowed, could have wide-ranging effects on the wireless industry. It's AT&T's first major deal since 2006, when it acquired BellSouth, its partner in Cingular Wireless, which was then renamed AT&T Mobility.
This also solves Deutsche Telekom's execution challenges with T-Mobile USA — it can now let AT&T, led by wireless CEO Ralph de la Vega, do the hard work, while getting an approximately 8% ownership stake in AT&T.
The companies will host a conference call at 8 a.m. ET Monday morning. Click here for the entire press release.
Republished with permission from BusinessInsider.com. Authored by Dan Frommer. Photo via AP.