A T-Mobile branded BlackBerry smart phone is pictured in Hoboken, New Jersey, March 20, 2011. [Photo/Agencies]

NEW YORK/FRANKFURT – AT&T plans to pay $39 billion to buy Deutsche Telekom AG's T-Mobile USA in a deal that is expected to attract intense regulatory scrutiny as it creates a new US mobile market leader.

AT&T, the No. 2 US mobile service, is looking to bolster its constrained network against a near insatiable appetite for videos and data from devices such as Apple Inc's iPhone and iPad users.

But the world's largest deal announced so far this year, which will bump Verizon Wireless from its No. 1 US position, could raise the ire of US consumers and regulators as analysts expect it to result in wireless service price increases. Consumers currently look to T-Mobile USA for some of the best value wireless service rates.

The transaction will increase AT&T's US market share to an estimated 43 percent from 32 percent, putting it well ahead of Verizon Wireless's current 34.5 percent share of US mobile customers, according to Tolaga Research estimates. AT&T will add 34 million customers to its current 96 million subscriber list.

As a sign of AT&T's confidence the deal will pass regulatory muster, it agreed to pay an unusually high breakup fee of $3 billion and to give T-Mobile USA wireless airwaves if regulators reject it. But they may be over-confident.

"I think it could reach some level of controversy," said an antitrust expert, who worked for the Justice Department's antitrust division. "There's going to be spectrum issues. This is going to be a complex deal and I don't think it's a foregone conclusion that it will be approved."

AT&T said it expected regulators to require it to sell some assets as a condition of approving the deal, which it hopes to complete in 12 months.

But another regulatory expert said it could take as long as 18 months for US competition and communications regulators to review the transaction.

"I certainly wouldn't say that this is a clean deal," said an antitrust expert with telecommunications experience.

AT&T Chief Executive Randall Stephenson told reporters on a conference call that AT&T had done its "homework" on the regulatory front and boasted that the deal could generate savings of more than $40 billion.

"This is a unique opportunity." said Stephenson. "It's rare you have a transaction where the synergies are greater than the price paid."

The companies have been talking for months according to sources familiar. Stephenson reached out to Deutsche Telekom CEO Rene Obermann in December, according to one source, who said he drove the process from the AT&T side.

The substance of the deal came together over the last month, and the companies had a handshake agreement a week ago, the source said.