The second-largest wireless voice and data carrier in the US by subscribers (after Verizon), AT&T Mobility serves about 100 million mobile users over a nationwide network that spans all major metropolitan areas. The subsidiary, which accounts for about half of parent AT&T's business, provides a full range of wireless voice, messaging, and data services to consumer and enterprise customers. AT&T Mobility's services for businesses, government agencies, and educational institutions include e-mail, wireless Internet access, and private wireless networking. The company provides international network coverage for its subscribers in more than 200 countries through partnerships with other carriers.
Continuing an ongoing effort to build its fastest growing business line through the acquisition of other mobile carriers, parent AT&T announced plans in 2011 to buy T-Mobile USA from Deutsche Telekom in a $39 billion cash and stock deal that would have vaulted the company past Verizon to become the leading wireless carrier in the US.
AT&T cancelled the deal in 2012 in the face of stiff legal opposition from the US Department of Justice, which asserted that reducing the number of national wireless carriers from four to three would inhibit competition and drive up prices. AT&T contended that the merger would have cut down on dropped calls and improved mobile Internet speeds for its data-hungry smartphone subscribers. The company was compelled to pay a break-up fee of about $6 billion to Deutsche Telekom to satisfy the terms of the agreement; the fee consisted of $3 million in cash, $3 million worth of wireless spectrum licenses, and a national roaming agreement
Increased network capacity would have improved rural wireless coverage and eased the congestion the company's network has suffered as more subscribers adopt smartphones. The deal would also have required AT&T and T-Mobile USA to cut costs by about $40 billion, possibly affecting thousands of jobs. The deal would have followed Verizon's $28 billion purchase of Alltel, which helped it overtake AT&T in 2009 as the top US mobile carrier.
In 2013 AT&T agreed to acquire the retail wireless business of Atlantic Tele-Network for about $780 million. The business, which operates under the Alltel name, will add nearly 600,000 rural customers in six states to AT&T's portfolio.
In a successful 2011 purchase, AT&T paid about $1.9 billion to acquire wireless spectrum licenses from Qualcomm to secure additional network capacity. The spectrum rights included the key markets of Boston, Los Angeles, New York, Philadelphia, and San Francisco, in addition to other areas nationwide. Qualcomm had been using the spectrum for its FLO TV service, which it switched off in 2011 due to poor performance in the market. The acquisition laid the technical and regulatory foundation for AT&T to potentially add about 70 million more customers
The previous year AT&T paid about $2.3 billion in cash to Verizon for wireless assets in 18 states. The deal came about as part of the broader regulatory conditions laid out by the Justice Department to enable Verizon's acquisition of Alltel. The deal boosted AT&T's subscriber number by about 1.6 million, mostly in rural areas.
The cornerstone of AT&T's mobile sales pitch had been an exclusive agreement with Apple to carry the iPhone in the US. In place from the time of the iPhone's introduction in mid-2007 until early 2011, the partnership gave Apple a leg up against Verizon, Sprint, T-Mobile, and other competitors who had to rely on arguably less hip devices from Research in Motion (Blackberry), HTC, and Samsung among the many other vendors looking to woo would-be smartphone users.
As the sole supporter of the iPhone in the US, AT&T enjoyed steady increases of sales and profits. Nothing lasts forever, however, and the addition of Verizon and Sprint as iPhone providers in 2011, as well as an industry-wide slow down in US wireless growth, have made it even more important for AT&T to persuade its basic cell phone (not to mention millions of landline holdouts) to upgrade to pricier mobile data plans and more powerful wireless devices.
In addition to slower subscriber growth in the the saturated US mobile market, higher operating expenses contributed to a significantly lower profit for AT&T in 2011, after an increase of about 40% the previous year. The company's profit margin fell into the single digits for the first time in more than a decade.