T-Mobile and Sprint $26 Billion Merge Deal: 2 Pros and 1 Cons You Need to Know About It
T-Mobile and Sprint officially announced their $26.5 billion merging deal that will make T-Mobile the third-largest carrier in the United States.
Nexter.org explains what to expect from this historic deal.
New giant arrival
T-Mobile and Sprint, the US third- and fourth-largest wireless carriers, respectively, agreed to a nearly $27 billion merger Sunday. The deal could dramatically reshape the U.S. telecom industry while testing the appetites of consumers and regulators alike for further corporate consolidation.
Sprint was valued at $26 billion based on its last closing price, and T-Mobile was last valued at $55 billion.
The agreement would leave just three major wireless carriers in the United States and must clear antitrust regulators. The combined company will be called T-Mobile and will place T-Mobile’s chief, John Legere, in the top job.
I’m excited to announce that @TMobile & @Sprint
have reached an agreement to come together to form a new company – a larger, stronger competitor that will be a force for positive change for all US consumers and businesses! Watch this & click through for details.— John Legere (@JohnLegere) April 29, 2018
T-Mobile CEO said on a conference call Sunday that the firm plans to deliver “the highest capacity network in US history.”
The combined company with T-Mobile will have an enterprise value of about $140 billion. T-Mobile and Sprint said they expect the deal to close by the first half of 2019.
Source: Chris Welch / The Verge
Possible perks
- The move comes at a time when the industry is racing to deploy the next generation of ultrafast wireless technology, called 5G.
Sprint and T-Mobile aim to convince the Trump administration that they would be in prime position to advance 5G, a next-generation data network for everything from smartphones to Internet-enabled cars and other technologies – with major investments that they could not have mustered individually.
“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience – and do it all so much faster than either company could on its own,” John Legere, the chief executive of T-Mobile, said in a statement. Under the newly announced merger, Legere would serve as leader of the combined company.
“As industry lines blur and we enter the 5G era, consumers and businesses need a company with the disruptive culture and capabilities to force positive change on their behalf,” he said.
The companies say, they’ll be able to lower prices and take advantage of “greater economies of scale”.
- One more “compelling benefit” is likely to be job growth. The new company promises to employ at least 200,000 people in the U.S. That number is expected to grow as the “New T-Mobile,” as the company is called in the press release, has pledged to invest $40 billion in infrastructure over the course of three years.
Possible risks
Critics of the deal are concerned that a post-merger environment could temper such practices altogether, especially as four major U.S. wireless carriers are whittled down to three. The new company would have more than 90 million retail wireless phone customers and a market share of about 30%, according to research firm Recon Analytics.
Sen. Amy Klobuchar, D-Minn., the top Democrat on the Senate’s antitrust subcommittee, raised concerns about the proposed merger. “Competition among the four largest cell phone carriers has led to lower prices, better service and more innovation,” she said in a statement. “I remain concerned that increased consolidation could undermine benefits to consumers.”
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