April 29, 2018
As expected, wireless telecom carriers T-Mobile and Sprint April 29 announced entering into a definitive merger agreement. The $26.5 billion all-stock transaction values the combined companies – to be known as T-Mobile – around $146 billion with about 100 million subscribers.
The new company will be headquartered in Bellevue, Wash., and led by current T-Mobile CEO John Legere, with current T-Mobile COO Mike Sievert assuming the same position in the new operation. Masayoshi Son, CEO of SoftBank Group, which owns Sprint, and Marcelo Claure, CEO of Sprint, will serve on the board of the new company.
“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses … and do it all so much faster than either company could on its own,” Legere said in a statement. “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.”
Driving the oft-rumored merger is growing nationwide rollout of 5G wireless technology. With Comcast, Verizon, AT&T and Charter all launching the new technology, which claims to deliver faster mobile broadband networks, which claims video download speeds up to 10 gigabits per second.
5G is expected to create 3 million jobs in the United States and $500 billion in economic growth by 2024, according to a report from CTIA, a wireless technology trade group.
Faster video access is key to Netflix, which last year entered into a marketing deal with T-Mobile giving new data subscribers free access to the subscription video-on-demand behemoth.
“Going from 4G to 5G is like going from black and white to color TV,” Claure said. “It’s a seismic shift – one that only the combined company can unlock nationwide to fuel the next wave of mobile innovation.”
Like any major corporate merger, federal regulators have to sign off on it – no certainty into today’s M&A landscape as the Justice Department wages a legal battle against the merger of AT&T and Time Warner.
T-Mobile claims the combined company will employ more than 200,000 people, generate lower operating costs, greater economies of scale and network capacity, which it claims should make wireless, and adjacent industries like cable and broadband, more affordable for everyone.
Five years ago, T-Mobile merged with MetroPCS to better compete in the 4G market – a transaction it claimed resulted in substantial job growth. Three times the number of people work at MetroPCS today compared to the time of the acquisition in 2013.
The new T-Mobile claims it would accelerate long-term economic stimulus for the U.S. in 5G, leading to the creation of thousands of domestic jobs and supporting business opportunities for the U.S. economy.
“We’re confident that, once regulators see the compelling benefits, they’ll agree this is the right move at the right time for consumers and the country,” said Legere.