New York ( CNN ) -- AT & T will acquire T-Mobile USA from telecommunications company Deutsche Telekom for an estimated $ 39 billion in cash and stocks , the companies said in a joint release Sunday . The acquisition will expand AT & T 's 4G network 1.2 million square miles and will be accessible to an additional 46.5 million Americans , the statement said . AT & T also expects to gain enough cell towers to increase its network density by 30 % . `` This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation 's future , '' AT & T chief executive Randall Stephenson said in a statement . The $ 39 billion purchase will include a $ 25 billion cash payment ; the remainder will be paid using AT & T stock . AT & T can increase the cash portion of the price tag by up to $ 4.2 billion while cutting the stock portion . As part of the acquisition , Deutsche Telekom will have an 8 % equity stake in AT & T and a company representative will join the AT & T board of directors . The agreement has been approved by the boards of directors at both AT & T and Deutsche Telekom . CNNMoney : AT & T to acquire T-Mobile for $ 39 billion . The new entity would be the biggest in the US , combining AT & T 's 95 million customers with T-Mobile 's 34 million users for a total of 130 million subscribers . AT & T said the transaction would quickly provide `` the spectrum and network efficiencies necessary ... to address impending spectrum exhaust in key markets '' due to the exponential growth of traffic on its network . The telecom giant added that it expects to gain enough cell towers through the deal to increase its network density by 30 % . As part of the merger , AT & T committed to expand its 4G network 1.2 million square miles , making it accessible to an additional 46.5 million Americans , mostly in rural and smaller communities , the statement said . The AT & T release notes that its 4G expansion would help achieve the Federal Communications Commission and President Obama 's goals to connect `` every part of America to the digital age . '' The $ 39 billion purchase will include a $ 25 billion cash payment ; the remainder will be paid using AT & T stock . AT & T can increase the cash portion of the payment by up to $ 4.2 billion while cutting the stock portion . AT & T did n't directly address how the merger would affect the new company 's pricing . But on the website it built to announce the deal , www.mobilizeeverything.com , it notes : `` Historically , during periods when carriers combined to achieve efficiencies , U.S. wireless prices fell . '' The company also cites a 2010 report from the U.S. General Accounting Office which found that the average cost of wireless services ( adjusted for inflation ) `` declined 50 percent from 1999 to 2009 , during a period which saw five major wireless mergers . '' The agreement has been approved by the boards of directors at both AT & T and Deutsche Telekom , but will be subject to regulatory approval . Fortune : Regulatory hurdles await merger . Charles Golvin from Forrester Research said : `` AT & T 's acquisition of T-Mobile , if approved , brings good news and bad news . 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 : the cost of that service wo n't 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 US . While clearly troublesome for Sprint and other mobile smaller mobile competitors , It 's also bad news for cable operators , whose incipient mobility products will suffer in comparison to what AT & T and Verizon can offer . '' Fortune Magazine 's Seth Weintraub and CNNMoney 's Leigh Remizowski contributed to this report .
The acquisition will expand AT & T 's 4G network by 1.2 million square miles . T-Mobile parent company Deutsche Telekom will have an 8 % equity stake in AT & T . The agreement has been approved by both companies ' boards .