AT&T is to acquire the T-Mobile US business from Deutsche Telekom for $39bn (£24bn) as it looks to increase business and drive more users onto high-end mobile services.
The deal will give AT&T a huge US market share of around 40 per cent, and could prove crucial in moves to boost revenues following the loss of its exclusive iPhone sales contract.
AT&T said that the deal, which is large given the current economic climate, would give it an "optimal combination" of network assets and put it in a position to add capacity much more quickly than by any alternative measures.
It will also help AT&T expand its 4G/LTE services at a time when current wireless spectrum is nearing exhaustion in some markets, the firm added.
"It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people," said Randall Stephenson, AT&T chairman and chief executive.
"Mobile broadband networks drive economic opportunity everywhere, and they enable the expanding hi-tech ecosystem that includes device makers, cloud and content providers, app developers, customers and more."
Stephenson added that the firm is confident of a seamless integration and immediate improvements to its spectrum and networks.
Deutsche Telekom chairman and chief executive officer René Obermann agreed.
"Our common network technology makes this a logical combination and provides an efficient path to gaining the spectrum and network assets needed to provide T-Mobile customers with 4G LTE and the best devices," he said.
The German telecoms firm has already divested its T-Mobile business in the UK after the entity merged with France Telecom's Orange to become the largest operator in the UK, Everything Everywhere.
AT&T is expecting that the acquisition will immediately improve its business and network provision. The company's mobile data traffic has increased by 8,000 per cent over the past four years, and the firm has predicted that it will be 10 times higher within five years.
Service will also improve, and customers should see benefits in voice quality, for example. AT&T expects network density to increase by 30 per cent in its most populated areas. 4G/LTE coverage will also increase its reach to 95 per cent of the population.
AT&T is expecting the deal to increase its revenues and financial prospects, which took a knock after it lost its exclusive deal to sell the iPhone in the US.
The firm had held an almost four-year exclusive deal to sell the Apple handset, but it was announced in January that Verizon will also sell the phone.
The Verizon announcement kicked some sand in AT&T's face and the firms coyly rubbished the performance of each other's services. In the case of AT&T, this led to criticism of its network.
AT&T will announce its latest financial results this week.
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