After years of negotiations and subsequent breakups, T-Mobile and Sprint have finally agreed to merge companies. T-Mobile CEO John Legere, made a statement on Twitter saying, “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!” The combined company, which will take on the name T-Mobile, will consolidate the third and fourth largest wireless service providers in the country.
If the deal is approved, the resulting company would be the nation’s second-largest wireless carrier after Verizon, controlling approximately 100 million customers. The new company could eliminate duplicate spending, and better compete in the wireless race to deploy the next-generation of data technology, known as 5G. The technology will enable smartphones and other mobile devices to surf the web at speeds comparable to some of the fastest in-home Internet connections and deliver unmatched reliability.
The deal would value Sprint at $26 billion based on its last closing share price of $6.50. T-Mobile was last valued at $55 billion. Legere, who will lead the consolidated company, said on Sunday on a conference call, that the firm plans to deliver “the highest capacity network in US history.” As reported by CNN, he said the company will hire thousands of people in a bid to wrestle the leadership in connectivity from China and South Korea back to the United States. He also said that the merger will lead to lower prices for wireless customers.
Not everyone is optimistic about the deal which would leave only three major wireless providers in the nation. Blair Levin, a policy adviser for New Street Research said, “The general view on Wall Street is that as a result of this deal, there are likely to be job cuts and prices are likely to rise.” The potential merger was first discussed in 2014, but was scrapped due to concerns about regulatory challenges from the Obama administration. Andrew Schwartzman, an attorney who specializes in telecommunications, says it will still be “difficult” to get regulators to approve the merger, even under the Trump administration. “It will be difficult to convince the Justice Department that circumstances have changed so much that it’s necessary to go down to three providers,” he said. “That’s the major hurdle that has to be confronted.”
The announcement is the latest in the ongoing consolidations in the telecom industry. AT&T is currently in talks to acquire Time Warner in an $85 billion merger, which is still in federal court awaiting the judge’s decision.
By Ilana Siyance