T-Mobile purchases Sprint for $26.5B
Critic says consumers will be the losers if deal goes through regulators
T-Mobile U.S. agreed to acquire Sprint for $26.5 billion (U.S.) in stock, a wager that the carriers can team up to build a nextgeneration wireless network and get a jump on industry leaders Verizon Communications and AT&T.
The deal follows years of deliberations between Deutsche Telekom, the German company that controls T-Mobile, and SoftBank Group, the Japanese owner of Sprint, and comes about five months after an earlier merger attempt collapsed. The combination reduces the U.S. wireless industry to three major competitors from four, ensuring heavy scrutiny from regulators.
“We are going to have an impact on America,” said John Le- gere, the T-Mobile boss who will serve as chief executive officer of the combined entity, on a conference call Sunday. Rivals such as Verizon, AT&T and Comcast will have to respond, he said. “We are going to drag the rest of the players kicking and screaming to the prize, which is American leadership” in fifth-generation wireless networks.
Unlike other mergers that achieve cost savings by eliminating duplicate staff, the executives plan to keep dual headquarters in Bellevue, Wash., and Overland Park, Kansas. Sievert said 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 ru- ral areas where network expansion is planned.
The transaction would be “good for consumers, good for the economy, good for the country,” Sprint CEO Marcelo Claure said on the conference call Sunday. Claure will serve as a board member of the combined company.
Consumers will be the losers if T-Mobile and Sprint are allowed to merge, said Gigi Sohn, a fellow at the Open Society Foundations and former aide for the Federal Communications Commission (FCC). “Both companies have been feisty competitors to the two biggest national mobile wireless carriers, Verizon and AT&T” and a combination will lead to less choice for consumers, Sohn said.