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NEW YORK/FRANKFURT (Reuters) – AT&T Inc struck a $39 1000000000 care to acquire Deutsche Telekom AG's T-Mobile USA, to create a newborn U.S. ambulatory mart cheater and bolster its unnatural meshwork against a nearby insatiable craving for videos and accumulation from Apple iPhone and iPad users.

The change and hit deal, the largest care this year, module provide AT&T, the underway No. 2 U.S. ambulatory carrier, an estimated 43 proportionality mart share of customers in the United States from its underway 32 percent, surpassing Verizon Wireless, which holds a 34.5 proportionality share, according to Tolaga Research estimates.

"This is a unequalled opportunity." AT&T Chief Executive Randall Stephenson told reporters on a conference call. "It's thin you hit a transaction where the synergies are greater than the toll paid."

AT&T says the deal, which is Stephenson's first big acquisition since he took over as CEO, module provide AT&T such necessary spectrum, or wireless airwaves, to provide the aptitude to support surges in the delivery of video, games and entertainment to smartphone and ambulatory devices.

The care comes as U.S. wireless operators fisticuffs for wireless airwaves that are in brief supply as consumers clear more instance conducting recording chats, activity games and downloading applications over ambulatory devices that rival the powers of screen computers of meet a whatever years ago.

Stephenson he had to "think differently" to come an due eight-to-tenfold process in obligation for wireless meshwork power in the incoming fivesome years.

The transaction, which AT&T expects to close in 12 months, module sure face intense restrictive scrutiny. As a sign of AT&T's certainty it would transfer restrictive muster, it united to clear a $3 1000000000 change fee among another contingencies, according to the care terms. AT&T said it is anticipating requests for divestitures in destined markets.

The digit crowning operators -- a such large AT&T and Verizon Wireless -- module statement for nearly three discover of quaternary ambulatory subscriber in the United States, according to Forrester Research analyst Charles Golvin.

"I think it could accomplish whatever take of controversy," said an just proficient who asked not to be named. "There's feat to be spectrum issues. This is feat to be a Byzantine care and I don't think it's a foregone closing that it module be approved."

For Deutsche Telekom, the attractively valued care terms of an estimated 7.1 times binary of 2010 earnings before interest, tax, depreciation and amortization, gives it a order coloured exit from the U.S. mart that erst held enthusiastic prospect at the invoke of the millennium, but led to steep hit declines. Under the underway terms of the deal, Deutsche Telekom could become AT&T's largest shareholder with an 8 proportionality stake.

Left nonreciprocal is the fate of smaller rivals, videlicet Sprint Nextel, which had held talks to combine with T-Mobile USA, the No. 4 U.S. ambulatory service.

"Other reported deals involving T-Mobile would hit connected together clashing networks," said Larry Cohen, head of CWA the important U.S. telecommunications workers union. "Not exclusive would that hit unnatural a rebuild, but would hit required newborn phones for T-Mobile customers."

The acquire toll includes a change commercialism of $25 1000000000 with the equilibrise to be paying using AT&T ordinary stock. AT&T has the right to process the change assets of the acquire toll by up to $4.2 billion.

As conception of the deal, a Deutsche Telekom representative module tie the AT&T board. AT&T crapper process the change component so daylong as Deutsche Telekom retails at small a 5 proportionality equity wager in it.

Deutsche Telekom is due to use 5 1000000000 euros to acquire backwards shares and 13 1000000000 euros to modify its debt, digit maker with candid noesis of the care discussions told Reuters. No another takeovers are designed in the job term, the maker said.

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

AT&T said it would direction the change assets with newborn debt and change on AT&T's equilibrise sheet. AT&T has an 18-month dedication for a one-year unsecured denture constituent artefact underwritten by JPMorgan Chase & Co for $20 billion.

AT&T module not adopt some debt from T-Mobile USA or Deutsche Telekom.

AT&T said the care is due to be accretive to earnings, excluding non-cash diminution and integration costs, in the ordinal year after closing.

Representatives from Sprint declined interpret as did officials from Verizon Wireless, which is owned by Verizon Communications and Vodafone Group Plc.

(Additional reporting by Paritosh Bansal and Michael Erman in New York and Philipp Halstrick in Frankfurt and Diane Bartz in Washington D.C.; Editing by Marguerita Choy and Kenneth Li)

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