T-Mobile, Sprint to merge with eye on future 5G race
Deal leaves 3 wireless carriers; critics worry about lack of competition
T-Mobile and Sprint are merging in a deal that would create the No. 3 U.S. cellular carrier but could signal that the days of aggressive competition for customers are coming to an end.
The merger, an all-stock deal announced Sunday, will see Sprint become part of the T-Mobile brand. Under the deal, Sprint has an implied enterprise value of $59 billion, and the combined company will be worth roughly $146 billion.
The two companies say the deal gives the best position for the two companies to compete in the forthcoming 5G race for faster mobile internet.
T-Mobile had about 73 million subscribers at the end of last year and Sprint about 54 million. Compare that to AT&T, which, including connected “Internet of Things” devices, had about 141 million subscribers, and to Verizon, with its 162 million.
“It’s a very simple rule of business. Both companies need each other,” Sprint CEO Marcelo Claure said. “The reason why this is going to work is that T-Mobile cannot do the 5G strategy without Sprint, and Sprint cannot do it without T-Mobile.”
The new company will be named TMobile.
“Convergence between mobile broadband and cable isn’t just a hypothetical,” said T-Mobile CEO John Legere. “It’s a reality of our business on a day-to-day basis.”
More than 200,000 people will work on behalf of the combined company in the U.S. at the start. And the merged company’s plans to invest up to $40 billion in its new network and business in the first three years alone is a massive capital outlay that could fuel job growth at the new company and across related sectors.
The deal requires regulatory approval and if it is approved, Sprint subscribers might see some new pricing arrangements available and could become eligible for T-Mobile promotions such as free Netflix subscriptions.
Those on T-Mobile might get Hulu or Tidal subscriptions in return, as Sprint has been promoting under some of its plans.
Not everyone believes the merger is a good idea.
Gigi Sohn, a distinguished fellow at the Georgetown Law Institute for Technology Law & Policy, said the merger will mean fewer choices for customers and could prompt the three remaining companies to “act in concert.”
“Both companies have been feisty competitors to the two biggest national mobile wireless carriers, Verizon and AT&T, introducing consumer-friendly pricing and data plans that have pushed the big two to lower their prices and expand their data offerings,” she said in an email.