National Post (National Edition)
Sprint, T-MoBile must sell merger
T-Mobile plans to acquire Sprint for $26 billion and merge the two telecom companies, but they will have to convince regulators the market will remain competitive. Commission.
The companies stressed that they plan to have more employees following the combination, particularly in rural areas, than they do as stand-alone companies now.
They also emphasized that the deal would help accelerate their development of faster 5G wireless networks and ensure that the U.S. doesn’t cede leadership on the technology to China.
And they said the combination would allow them to better compete with a growing number of competitors in a changing market.
Verizon and AT&T have been expanding their videocontent businesses, while cable companies have been moving into wireless. That allows a single company to combine home and wireless internet and use content to support the communications businesses.
Comcast, the cable giant that finished buying NBCUniversal in 2013, offers customers wireless service by reselling access to Verizon’s network. So does another dominant cable company, Charter.
The all-stock deal values each share of Sprint at slightly more than 0.10 T-Mobile shares. Deutsche Telekom, T-Mobile’s parent, would own about 42 per cent of the combined company. Japan’s SoftBank, which controls Sprint, would own 27 per cent, and the remainder would be held by the public.
The companies said they expect the deal to close by the first half of 2019 and would result in about US$6 billion in annual cost savings.
Investors have been anticipating a deal like this for some time. In addition to the thwarted attempt three years ago, the two companies were poised to combine in October, but the deal was called off after what analysts said was a disagreement over control of the combined company.
The deal will have to be reviewed by the Justice Department and the FCC.
National carriers had not been able to get a deal through under President Barack Obama. But the FCC in September deemed the wireless market “competitive” for the first time since 2009, which some analysts say could make it easier to present a deal.
The 5G aspirations are at the heart of the agreement, and the new technology could allow companies to provide faster service to people’s homes.