Sprint and T-Mobile have reached an agreement to merge and form a new company that would become the third-largest mobile carrier in the United States. The transaction would convert Sprint stock at a price of 10 cents per share and the combined company would be valued at approximately $146 billion.
In a joint video announcement, Sprint CEO Marcelo Claure and T-Mobile CEO John Legere made their arguments for the combination to consumers and investors.
A three-year plan would see $40 billion being poured into the merged company’s 5G network with strong emphases on T-Mobile’s 600MHz spectrum and Sprint’s 2.5GHz licenses.
The company is taking advantage of Sprint’s established business-side clientele and T-Mobile’s expansion of its retail footprint to rural regions which currently lack competition from major carriers. More nationalist appeals include the idea that a New T-Mobile will help lead the United States in the 5G race as it had during the 4G era and that the net growth of jobs will go beyond what either carrier would do alone with contractors on 5G deployment and others. That said, the company is looking to run more than $6 billion in cost synergies.
New T-Mobile argues that the competitive field has become “converged” as existing telcos make moves with media integrations like Verizon with its Oath properties and AT&T, which is fighting the Department of Justice to acquire Time Warner, and other landline operators are launching MVNOs, like Comcast with Xfinity Mobile and Charter with a service under its Spectrum brand, though those networks don’t contain an organic cellular grid. The company is also pledging to lower prices for consumers
Plenty of uncertainty remains over how the combined company will handle their businesses such as their existing postpaid and prepaid customer bases. The deal is not also guaranteed to pass regulatory muster, especially as AT&T and Verizon are under a Justice Department antitrust investigation, though Sprint has curried more favor with the current presidential administration than its competitor AT&T has.
The New T-Mobile would retain both corporate headquarters of the current companies in Bellvue, Washington, and Overland Park, Kansas. T-Mobile’s current CEO, John Legere, and COO, Mike Sievert, will both retain their positions in the new company. The CEO of T-Mobile parent Deutsche Telekom, Tim Höttges, will retain Chairman of the Board status while chairman of SoftBank Masayoshi Son and current Sprint CEO Marcelo Claure will be on the board.