AT&T Wireless Services Inc. said today it will buy the 77 per cent of TeleCorp PCS Inc. that it doesn’t already own for US$2.4 billion in stock.
Under the deal, which has been approved by the boards of both companies, Redmond, Wash.-based AT&T Wireless will assume Arlington, Va.-based TeleCorp.’s approximately US$2.1 billion in debt, as well as US$221 million in preferred securities.
The deal is expected to close in the first half of next year, the companies said in a statement.
AT&T Wireless said this deal would expand its reach by 20 per cent, covering 16 of the U.S.’s top 100 markets, eight of the top 50, and more than 900,000 existing Telecorp customers.
“Strategically, this is the single most important move we could make to enhance long-term shareowner value,” AT&T Wireless chairman and CEO John D. Zeglis said in the statement. “We’re set to quickly roll out AT&T Wireless-branded services to 32 million more people across 14 states.”
AT&T couldn’t be reached for comment this morning.
“AT&T is our largest shareholder, with 23 per cent of our stock. This is the right step for us at the right time, as we look toward the future,” said Telecorp spokesman Russell Wilkerson. “This is part of an evolutionary process that we envisioned some time ago.”
Craig Mathias, an analyst at Farpoint Group in Ashland, Mass., said the deal is a continuation of a trend toward cellular industry consolidation.
“There are a lot of carriers [now], and in the end there will only be two or three, and AT&T wants to make sure it is one of those,” Mathias said.
Alan Reiter, an analyst at Wireless Internet & Mobile Computing in Chevy Chase, Md., said the deal is a way for AT&T to acquire additional subscribers at a relatively economical price. For Telecorp, being purchased by AT&T Wireless means the company will be better able to compete against larger national carriers.