June 29 (Bloomberg) -- AT&T Inc. agreed to buy Dobson Communications Corp., a provider of mobile-phone service under the Cellular One brand, for about $2.8 billion in Randall Stephenson's first acquisition as chief executive officer.

The purchase will add coverage in rural areas to AT&T's wireless network and save the company $2.5 billion in roaming costs and overhead expenses, San Antonio-based AT&T said today in a statement. Since 1990, the companies have had a roaming agreement in which they pay to use each other's networks.

Taking into account the expected savings, the purchase price is ``reasonable,'' said Jonathan Chaplin, an analyst at JPMorgan Chase & Co., in a research note. The transaction ``makes strategic sense,'' he said.

The bid continues an acquisition spree begun by former CEO Edward Whitacre, who orchestrated $200 billion in takeovers, turning AT&T into the largest telephone company in the U.S. His last purchase was the $86 billion acquisition of BellSouth Corp. in December. Stephenson took charge of the company this month.

AT&T will pay $13 in cash for each Dobson share, a 17 percent premium over the stock's closing price today of $11.11 on the Nasdaq Stock Market. The companies expect to get regulatory approval by the end of 2007, AT&T said.

The Dobson purchase will reduce AT&T earnings by 3 cents to 4 cents a share in the first year after the transaction closes, AT&T said. After that, it's expected to add to earnings and cash flow.

AllTel Purchase

The acquisition is the second this year for a U.S. mobile- phone service focused on rural and suburban markets. Alltel Corp. agreed to be acquired by Goldman Sachs Group Inc. and TPG Inc. last month in the largest leveraged buyout of a telecommunications company.

The sale of other rural providers may follow, Credit Suisse analyst Christopher Larsen said in an interview last month. In addition to Dobson, he identified Rural Cellular Corp., Centennial Communications Corp. and U.S. Cellular Corp. as potential targets.

Other companies with rural mobile-phone operations include Cincinnati Bell Inc. and Alaska Communications Systems Group Inc.

AT&T's shares rose 76 cents to $41.50 at 4:28 p.m. in New York Stock Exchange composite trading. Dobson's shares fell 1 cent.

Rural Coverage

Dobson, based in Oklahoma City, has 1.7 million subscribers in 17 U.S. states. Its 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.

The company is the largest wireless provider in Alaska, according to its Web site. It also has more than 200 stores in locations such as Elk City, Oklahoma, and Weston, Wisconsin.

Sales in the first quarter climbed 16 percent to $334.4 million. It reported a loss in the period of $30.6 million, compared with a loss of $10.9 million a year earlier.

AT&T will replace the Cellular One brand with its own, spokesman Michael Coe said.

Dobson and AT&T use the same type of mobile-phone technology, which will make the acquisition easier to manage, AT&T said.

AT&T was represented by Lehman Brothers Inc., with outside legal counsel from Sullivan & Cromwell LLP, Coe said. Dobson was represented by Morgan Stanley, with outside legal counsel from Mayer, Brown, Roe & Maw LLP.

To contact the reporters on this story: Crayton Harrison in Dallas at tharrison5@bloomberg.net; Ville Heiskanen in New York at vheiskanen@bloomberg.net

Last Updated: June 29, 2007 20:09 EDT