US telecom giant AT&T said it will buy T-Mobile USA for $39 billion from Deutsche Telekom, the European telecom company.

In a statement AT&T Inc and Deutsche Telekom AG announced that “they have entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction currently valued at approximately $39 billion.”

The deal, which was approved by the boards of both companies, includes $25 billion in cash and the rest in AT&T stock. Deutsche Telekom would receive an 8 per cent stake and a seat on AT&T’s board as part of the transaction.

The deal will benefit customers, who would get access to AT&T’s 4G technology. Besides, AT&T said the deal would help boost US infrastructure and improve network quality.

“This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future,” AT&T Chairman and CEO, Randall Stephenson, said.

The acquisition is expected to close in 12 months, subject to regulatory approvals. The acquisition would reduce the number of wireless carriers in the US from four to three and is likely to face intense regulatory scrutiny. The deal would add 34 million customers to AT&T’s current 96 million and the combined entity would serve about 43 per cent of US cellphones.