AT&T Picks Up Dobson in $2.8 Billion Deal

Updated from 5:23 p.m. EDT

Telecom giant AT&T (T Quote) agreed to buy rural wireless carrier Dobson Communications (DCEL Quote) for roughly $2.8 billion cash.

AT&T will pay $13 a share for Dobson, representing a 17% premium over the stock's closing price of $11.11 Friday.

Dobson, based in Oklahoma City, has roughly 1.7 million subscribers in 17 states. AT&T said the deal will help it expand its reach in rural and suburban markets.

"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," said AT&T chairman and CEO Randall Stephenson.

"The combination of our two companies also will create value for AT&T's stockholders," Stephenson added. "Our wireless business is a significant and growing revenue generator and is critical to our future. This combination brings two key assets -- Dobson's 1.7 million customers and its strong, compatible network -- to AT&T, delivering both growth and cost savings opportunities."

Dobson, which markets wireless service under the Cellular One brand, has provided roaming service to AT&T and predecessor companies since 1990.

Shares of Dobson were surging $1.69, or 15.6%, to $12.80 in late trading Friday.