T-Mobile Buys Sprint for $26 Billion
T-Mobile has agreed to buy its rival Sprint in a $26 billion merger deal.
The merger of the US’s third and fourth largest telecom companies is designed to create a more competitive entity with about 130 million customers.
However, the deal is expected to attract regulatory scrutiny over its potential impact on customer prices.
T-Mobile CEO John Legere said the new company would spend $40 billion on building a 5G mobile network in the next three years.
He said in one of a series of tweets: “Together, we will build the highest-capacity mobile network in US history!! I’m talking 30X more capacity than T-Mobile today!!”
The deal comes after months of negotiations between T-Mobile’s controlling shareholder, Deutsche Telekom, and Japan’s SoftBank, which controls Sprint.
Under the deal, Deutsche Telekom will own 42% of the combined company and control its board. Softbank will hold a 27% stake.
John Legere will lead the new company which will take the T-Mobile name and have a market value of $146 billion.
Image source Wikimedia
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According to analysts, the combined company would have more clout to compete with the first and second biggest US telecoms companies, Verizon and AT&T, each of which have more than 100 million subscribers.
In particular, aanlysts say it would be better positioned for America’s looming shift to next generation 5G mobile broadband technology.
They also believe that, without T-Mobile, Sprint lacks the scale needed to upgrade its network.
T-Mobile and Sprint had been in talks about a potential tie-up since 2014, when the Obama administration stopped a previous merger attempt over competition concerns.
Under the Trump administration, regulators have continued to challenge deals they believe could push up prices and are likely to scrutinize this latest takeover closely.
The DoJ is currently trying to block AT&T’s deal to buy US media giant Time Warner for $85 billion, warning that “consumers all across America will be worse off” if it goes ahead.
As Reuters reported earlier in April, the DoJ has also allegedly opened a probe into claims of co-ordination by AT&T, Verizon and a telecoms standards body to hinder consumers from easily switching provider.
In a statement, John Legere said the merger between Sprint and T-Mobile would lower prices and help the US accelerate its development of 5G, amid fierce competition from China.
The T-Mobile CEO also said it would create tens of thousands of jobs in rural America – factors analysts say could help sway officials in the Trump administration.