AT&T, T-Mobile merger to shake up U.S. wireless market

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Verizon Wireless ( VZ ) can definitely hear them now.

AT&T ( T ) took a bold, $39 billion step towards becoming the largest wireless service provider in the U.S., dramatically changing the field of competition for mobile phone customers. If the merger of AT&T and Deustche Telekom's T-Mobile U.S. unit receives regulatory approval, it will make the combined firm the largest wireless company in the U.S., with more than 125 million customers to Verizon's 95 million or so.

This isn't about customers, though - it's about hardware. AT&T's been battered by the perception that its towers can't handle the flood of traffic from the iPhone, and Verizon's ads have leaned heavily on the theme that its competitor can't deliver the goods. In addition, the race is on to roll out a true "4G" wireless network that offers broadband speeds on smartphones, and AT&T can barely keep up with 3G demand.

The deal, if it goes through, will likely see AT&T dump a lot of its traffic onto T-Mobile's towers, while possibly extending the sale of devices like the Apple ( AAPL ) iPhone 4 to T-Mobile customers.

In addition, closing this deal will consolidate the only two GSM-band carriers in the States into a single unit. GSM is standard in many overseas markets, but in the U.S it competes with CDMA, which is employed by Sprint ( S ) and Verizon.

Sprint's shares plummeted on Monday - many expected it to cut a deal with T-Mobile itself; while AT&T's and Deustche Telekom's rose.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Business , Technology , US Markets

Referenced Stocks: AAPL , S , T , VZ

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