AT&T announced today that it will acquire Oklahoma City-based Dobson Communications Corp., a provider of rural and suburban mobile services, for about $2.8 billion in cash. Both companies operate GSM EDGE networks, and have been roaming partners thus far.

Dobson's network specifically will enhance AT&T's coverage to a potential 13 million customers in 17 states. Dobson currently has 1.7 million subscribers, and operates under the long-standing Cellular One brand. Company chairman Everett Dobson noted in a statement, "Our customers will gain access to the wide range of innovative products and services AT&T offers, such as the revolutionary iPhone, to which they would not have access without this merger."

Dobson's network covers rural and suburban areas in Alaska, Arizona, Illinois, Kansas, Kentucky, Maryland, Michigan, Minnesota, Missouri, New York, Ohio, Oklahoma, Pennsylvania, Texas, Virginia, West Virginia and Wisconsin. Because Dobson's network overlaps minimally with AT&T's, the acquisition will expand geographic coverage for both companies' customers, statement said, adding that Dobson's 850 MHz spectrum will enhance AT&T's service quality in those rural and suburban markets.

"AT&T is focused on mobility, which includes offering our customers in markets large and small the best and broadest wireless network," said Randall Stephenson, chairman and CEO of AT&T. "The rural market is attractive to us, and the addition of Dobson to our wireless family will expand our network coverage and better allow the customers of both companies to be connected whenever, wherever and however they want.

Under terms of the agreement, approved by the boards of directors of both companies, Dobson stockholders will receive $13 per share for a total equity price of $2.8 billion on a fully diluted basis. Including net debt as of the first quarter of 2007, the total transaction value is about $5.1 billion, the statement said. The $13 price per share represents a 16.9% premium over the closing price of $11.12 on Thursday, June 28, 2007. The majority stockholder in Dobson Communications has consented to the terms of the agreement.

AT&T said it expects to realize significant annual savings in reduced roaming expenses as a result of the acquisition, as well as potential synergies that have a net present value of about $2.5 billion. The acquisition is subject to regulatory approval, and the goal is to obtain approvals by the end of this year.