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Sprint, T-Mobile to merge in $26B deal

2018-04-30 06:54 by
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T-Mobile and Sprint, the nation's third- and fourth-largest wireless carriers, announced a roughly $26.8-billion merger Sunday that could dramatically reshape the U.S. telecom industry. The merger aims to create a more competitive firm with about 130 million customers.

The all-stock deal would combine Sprint, which has a market value of $26 billion, with T-Mobile, which has a market value of $55 billion, based on Friday's closing prices. The two companies also have about $60 billion of combined debt.

Under the deal, Deutsche Telekom will own 42% of the combined company and control its board. Softbank will hold a 27% stake. Unlike other mergers that achieve cost savings by eliminating duplicate staff, the executives plan to keep dual headquarters in Bellevue, Washington, and Overland Park, Kansas. The combined worldwide workforce of about 240,000 employees will increase once the merger is complete. Most of the new jobs will be network related, many in rural areas where network expansion is planned.

This is the third time in recent years that the two rivals have attempted the combination. For years, T-Mobile and Sprint had considered such a tie-up, only to abandon their plans. Their hurdles have included government regulators, who previously argued that consumers are best served — with better prices and more choices — if there are four major wireless carriers, not three.

Now the two companies will have to wait for regulators' approval. Sprint and T-Mobile will try to convince regulators and possibly President Donald Trump that the combination will lead to bigger investments in 5G networks and put pressure on larger rivals, even though consumer benefits aren't obvious.

The US Justice Department is currently trying to block AT&T's deal to buy US media giant Time Warner for $85bn, warning that "consumers all across America will be worse off" if it goes ahead.

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