Sprint and T-Mobile have finally reached a merger agreement, which means the already small cell phone carriers in the United States took a step towards becoming even smaller today. Both announced that they will be merging. With a new press release being sent out by the newly formed company. So the two of the four major regulators in the U.S. will combine into one entity in an all-stock deal worth billions.
Assuming the deal makes its way through the usual regulatory approval systems then there will be just three major carriers in the United States from now. The combined company will carry the name T-Mobile and will be headed by existing T-Mobile top dog John Legere, will serve as the Chief Executive Officer. Sprint and T-Mobile say the company will be a “force for positive change” in the U.S. wireless, video, and broadcasting industries, supercharging T-Mobile’s Un-carrier strategy and allowing the new company to “lead in the 5G era.”
Regarding the deal with Sprint, T-Mobile says that once the two firms are made one it will be able to fund the network capacity improvements needed to be able to boast the first nationwide 5G network.
The New T-Mobile will have the network capacity to rapidly create a nationwide 5G network with the breadth and depth needed to enable U.S. firms and entrepreneurs to continue to lead the world in the coming 5G era, as U.S. companies did in 4G. The new company will be able to light up a broad and deep 5G network faster than either company could separately.
T-Mobile deployed nationwide LTE twice as fast as Verizon and three times faster than AT&T, and the combined company is positioned to do the same in 5G with deep spectrum assets and network capacity.
According to the terms of the deal, T-Mobile plans to exchange 9.75 Sprint shares for each T-Mobile share. The company took the opportunity to take a swipe at both AT&T and Verizon when pointing how much quicker than both companies it was able to get 4G rolled out. And the new company is confident that not only will it continue to beta both firms to the punch but also do it by some margin.
Deutsche Telekom, T-Mobile’s parent company, with this deal will own 42 percent of the combined company and SoftBank, Sprint’s parent company, will own 27 percent. Deutsche Telekom will have voting rights over 69 percent of the new company and will appoint nine of its 14 directors, while Sprint will only appoint four.
“T-Mobile US (NASDAQ: TMUS) and Sprint Corporation (NYSE: S) today announced they have entered into a definitive agreement to merge in an all-stock transaction at a fixed exchange ratio of 0.10256 T-Mobile shares for each Sprint share or the equivalent of 9.75 Sprint shares for each T-Mobile US share.”
While mergers tend to also come with job losses, T-Mobile claims that the move will handle and see thousands of new jobs created, something that may be hard to reconcile for those of us who have seen similar mergers decimate workforces. The combined company also said to will “create a fierce competitor” that’s able to “deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience,” while current Sprint CEO will serve on the board of the new company, said that the merger will make the U.S. a “hotbed for 5G innovation.”
In fact, in the press release, T-Mobile claims 200,000 new jobs are expected to be created in the United States initially, with that number increasing to a mind-boggling three million once 5G is rolled out.
“The combined company will have lower costs, greater economies of scale, and the resources to provide U.S. consumers and businesses with lower prices, better quality, unmatched value, and greater competition. The New T-Mobile will employ more people than both companies separately and create thousands of new American jobs.”
For now, the deal between Sprint and T-Mobile still needs to be approved by antitrust regulators in the United States, and if it goes through, the U.S. will have three major carriers rather than four.
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