AT&T (NYSE: T) announced it will buy T-Mobile USA from parent company Deutsche Telekom for $39 billion in cash and stock that will see AT&T Mobility significantly broaden its network footprint and enable it to deploy next-generation LTE technology to 95 percent of the population.

The acquisition has been approved by the board of directors of both companies, but is subject to regulatory approval from the Federal Communications Commission and the Department of Justice. The companies expect the deal to close in a year.

AT&T is the second-largest mobile operator behind Verizon Wireless (NYSE: VZ). T-Mobile USA is No. 4 in the market. The deal will dramatically increase AT&T's subscriber base from 95.5 million to 129.2 million. If the deal is approved, it would push AT&T past Verizon Wireless as the nation's largest wireless carrier in terms of subscribers. Verizon Wireless ended the fourth quarter with around 102 million wireless connections. Verizon has a head start in the LTE market, having launched 38 LTE markets at the end of 2010.

As part of the deal, AT&T will pay $25 billion in cash and the rest in stock. In return, Deutsche Telekom will receive an equity stake in AT&T that would give it an ownership interest of approximately 8 percent. In addition, a Deutsche Telekom representative will join the AT&T board of directors.

In its press release announcing the merger, AT&T said the acquisition will result in additional spectrum, increased cell tower density and broader network infrastructure, and added that this improvement would result in better voice quality. Ever since AT&T launched the Apple (NASDAQ: AAPL) iPhone in 2006, it has been criticized for the quality of its network and its ability to handle the increased data demands brought about by the iPhone.

For more:
- see this release

Related Articles:
AT&T: 40 percent of iPhone sales are to business customers
Will the iPhone affect business phones?
Tablets are ready to go to work, but is the enterprise ready?
Apple expected to introduce iPhone 4.0; will multitasking be supported?