AT&T Inc. is buying T-Mobile USA for $39 billion.

AT&T is acquiring Bellevue-based wireless provider T-Mobile from Deutsche Telekom in a cash-and-stock deal. In a joint statement Sunday, both companies said their boards had approved the blockbuster deal, which is expected to take a year to complete.

The purchase, still subject to approval by regulatory boards, would create the largest mobile phone company in the U.S.

If the deal closes, it would combine the nation's second- and fourth-largest wireless carriers, creating a company with nearly 130 million subscribers, and could lead to higher rates for consumers, experts said.

Sunday’s deal announcement came as a shocker to many in the industry. As recently as March 8, Deutsche Telekom AT was said to be in talks to sell its Bellevue-based subsidiary T-Mobile USA to Sprint Nextel Corp.

A merger between AT&T (95 million customers) and T-Mobile (33.7 million customers) promises to shake up the highly competitive cellular carrier industry.

An NYT article flashes that the deal is expected to draw heavy scrutiny from regulators in Washington. Here's some context from the NYT report:

The deal would leave only three major cellular carriers in the nation: AT&T, Verizon and a much smaller Sprint, which may now be forced to find a merger partner.

Already, some critics say the deal could result in higher prices for consumers. T-Mobile had offered some of the lowest rates in the country. While AT&T is expected to honor current T-Mobile contracts, it is likely that once those expire, T-Mobile customers may have to pay AT&T’s higher rates.

In November, T-Mobile launched an advertising campaign laying claim to “America’s Largest 4G Network” while poking fun at the notorious network problems experienced by iPhone users on the competing AT&T network.

And now AT&T is poised go gobble up T-Mobile. The acquisition would allow AT&T to significantly expand its 4G LTE (LongTerm Evolution) deployment to 95 percent of the U.S. population to reach an additional 46.5 million Americans beyond current plans – including rural communities and small towns.

The $39 billion price tag includes a cash payment of $25 billion with the balance to be paid using AT&T common stock, subject to adjustment. AT&T, whose wireless unit is based in Atlanta, assumes no debt from T-Mobile USA or Deutsche Telekom, the companies said.

Here is a link to AT&T's announcement.

Here is a statement from AT&T CEO Randall Stephenson:

This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future. It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people. Mobile broadband networks drive economic opportunity everywhere, and they enable the expanding high-tech ecosystem that includes device makers, cloud and content providers, app developers, customers, and more. During the past few years, America’s high-tech industry has delivered innovation at unprecedented speed, and this combination will accelerate its continued growth.

This transaction delivers significant customer, shareowner and public benefits that are available at this level only from the combination of these two companies with complementary network technologies, spectrum positions and operations. We are confident in our ability to execute a seamless integration, and with additional spectrum and network capabilities, we can better meet our customers’ current demands, build for the future and help achieve the President’s goals for a high-speed, wirelessly connected America.

Update: T-Mobile put up a Q&A. T-Mobile says that, for now, customers won’t see much change. What was not addressed was what impact the deal might have on T-Mobile’s local workforce.

T-Mobile also opened up a forum and invited comment on the deal. Early feedback suggests that there is displeasure among some customers about the pending deal.

Here is a forum post from crawfishandbeer:

This is very upsetting news .....Please say it aint so!!!!!! I have never had a problem with tmobile i guess that all comes to a end now I had at&t early 2000 and i hated them They sent me a 700 dollar bill for roaming charges!!!!!! This is a sad day in cell phone history...... WHY TMOBILE WHY????????

PSBJ Managing Editor Alwyn Scott contributed to this blog post.