Sprint, T-Mobile merger would transform industry
Sprint and T-Mobile announced Sunday that they had reached a deal to merge, moving to create a new telecommunications giant — and betting that regulators will finally allow the U.S. wireless service market to shrink to just three national players.
The new company, which would keep the T-Mobile name, would have nearly 100 million retail subscribers. That would give the combined businesses serious heft in a fight against Verizon and AT&T, the two industry leaders that currently control a majority of the U.S. wireless market.
Sprint and T-Mobile have tried repeatedly to merge, arguing that combining is the only way they can compete. But their previous two attempts failed: in 2014 because of opposition from regulators, and last year because of disagreements over control of the unified company.
The question this time is whether Washington regulators, even under a Trump administration that has sometimes looked more favorably on mergers, will allow one of the most transformative consolidation effort in years to take place.
Critics worry that shrinking the U.S. wireless industry to just three providers would lead to higher prices for consumers, though the companies, in their announcement of the deal, argued that a merged company would “provide U.S. consumers and businesses with lower prices, better quality, unmatched value, and greater competition.”
The parent companies of each carrier — SoftBank of Japan, which controls Sprint, and Deutsche Telekom of Germany, which owns a majority of TMobile — managed to solve the long-standing issue of control in recent weeks.
Under the terms of the allstock deal announced Sunday, Sprint would be valued at about $26.5 billion and T-Mobile at about $54.1 billion. Deutsche Telekom would own roughly 42 percent of the combined business and have nine of 14 seats on the new T-Mobile’s board. SoftBank would own 27 percent and have four seats. Public shareholders would own the remainder.
John Legere, T-Mobile’s chief executive and an architect of a low-cost strategy that ignited a price war among U.S. wireless service providers, would run the merged company. The business would have headquarters in both Bellevue, Wash., where T-Mobile is based, and Overland Park, Kan., Sprint’s home.