This is the third attempt to bring the two operators together now in the US will increase competition to Verizon and AT&T.
After two failed attempts, it should be only the third that a mega-deal in the telecommunications sector in the United States will take place.
T-Mobile has agreed to buy rival Sprint in a $26 billion deal that will unite the country’s third and fourth largest mobile telecommunications companies. The merger came close to happening in 2014 (at the time was hit by the Obama administration) and in November last year, when negotiations were canceled due to lack of understanding among major shareholders.
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.
The resulting company will continue to be known as T-Mobile and will lead John Legere, current CEO of T-Mobile. That is, the name of Sprint will be lost in the merger and its CEO will occupy another position of responsibility within the new structure. The big promise made by both CEOs in the announcement of the merger is to build the largest 5G network in the United States.
Although it still remains to receive the approval of the competition authorities, something usual in any operation of this type, the company resulting from the merger will have 100 million customers in total. In addition to betting on building a 5G network throughout the United States, they promise to improve the rural Internet, create more jobs than they would create separately and invest 40,000 million in new businesses in the next 3 years.
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.
If for T-Mobile it supposes a definitive accolade in its aspirations to fight against AT&T and Verizon, for Sprint supposes even more. The operator has had problems in recent years to retain its customers and to be profitable. With this merger, they will have a better competitive position.
The new company will have a market value of $80 billion and about 127 million customers, thus gaining muscle to increase competition to Verizon, which is the largest mobile operator in the country, as well as to AT&T, which is second place.
Sprint lost nearly 20% of its stock market value in November, due mainly to investors’ fears about the company’s ability to survive alone due to the high debt value: $32 billion dollars.
The negative evolution of the operator’s finances led Sprint to hire Michel Combes, Altice’s former CEO, for the position of financial manager.