We could soon see the number of major mobile carriers in the United States decrease from four to three if things go according to plan. T-Mobile and Sprint have finally agreed to merge, so long as the merger is approved by anti-trust regulators, that is. The companies were reportedly in talks to merge in September last year, and it was then later reported that discussions had been dropped – largely due to how much control Deutsche Telekom would have over Sprint (not to mention the valuation of the company’s shares as well). The companies have valued their combined worth at $146 billion, with T-Mobile paying about $26 billion for Sprint’s shares at $6.62 each. This is because T-Mobile is paying 9.75 Sprint shares for each T-Mobile U.S. share, which is about $6.62 to T-Mobile’s Friday closing price of $64.52.
Originally, the companies planned to merge in 2014 but felt that under the Obama administration the merger would be shut down. Both companies feel that they have a better shot of pulling it off under the Trump administration. If both companies merge, then that will create a new contender better capable of taking on AT&T and Verizon. It is unknown how U.S. regulators will view the merger, as the mobile telecommunications market in the U.S. has little competition. Reducing the number of companies active in the sector only strengthens that oligopoly. The first plan for the companies, if they are to merge, is to roll-out the first 5G network in the US to what could potentially be 100 million customers.
As for the company’s structure, current T-Mobile CEO John Legere will run the company, with current COO Mike Sievert becoming COO and company President. Sprint CEO Marcelo Claure and SoftBank CEO Masayoshi Son will both sit on the company’s board. Deutsche Telekom will hold a 42% stake in the company, Sprint will hold 27%, and the rest is held by public shareholders. The combined company will have lower costs and greater economies of scale according to T-Mobile, and it will create thousands of American jobs. The company will be located in Bellevue, Washington.
While that’s all well and good, the deal will need to be cleared by regulators first. It’s unknown how exactly that will go down, but both companies are reasonably confident that it will go through.
What are your thoughts on the merger of T-Mobile and Sprint? Will this have negative consequences on the market, or will the merger lead to better plans in America? Let us know in the comments below!
Source: T-Mobile
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