AT&T will pay $39 billion in cash and stock to acquire wireless rival T-Mobile USA, the companies jointly announced Sunday.
The deal will combine AT&T, the second biggest wireless brand in the U.S., with the nation's fourth-leading brand.
AT&T will pay Deutsche Telekom AG $25 billion in cash for T-Mobile; Deutsche Telekom will also receive 8 percent in AT&T company stock.
The deal is expected to take about a year to gain the needed regulatory approval and close.
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Bellevue, Wash.-based T-Mobile USA is coming off of two consecutive fiscal year of flat revenue and has struggled to keep pace with larger rivals AT&T and Verizon.
The company's subscriber count has stalled at just under 34 million, according to the Associated Press, but it has remained consistently profitable.
There had rumors prior to AT&T's overture that Deutsche Telekom would sell the asset, the speculation circled around Sprint Nextel Corp.
In their statement, both companies indicated that the merger will provide for improved broadband capabilities — a sore point for AT&T, which has heard plenty of complaints from iPhone users over the last several years.
The companies said the merger will provide a "fast, efficient and certain solution to the impending exhaustion of wireless spectrum in some markets, which limites both companies' ability to meet the ongoing explosive demand for mobile broadband."
The companies also said the merger would speed up the roll-out of the next-generation wireless standard LTE. AT&T said it's commtting to "significant expansion of robust 4G LTE," with plans to reach 95 percent of the U.S. population.
In the statement, AT&T said the company is "confident in our ability to executve a seamless integration."
For its part, Sprint is still struggling to figure things out after its 2005 takeover of Nextel.
However, AT&T has plenty of experience with mergers, having successfully ingested its $85 billion purchase of BellSouth in 2006.
"AT&T's acquisition of T-Mobile, if approved, brings good and bad news," Forrester Research analyst Charles Golvin told Mashable. "The good news: high-speed mobile broadband service will improve in quality and coverage, including — in the long run — those in rural communities outside the reach of terrestrial broadband today."
The bad news, Golvin added: "The cost of that service wont' come down nearly as fast as customers would like, since AT&T and Verizon Wireless combined would own nearly three out of every four wireless subscriptions in the U.S."