T-Mobile and Sprint Announce Merger Attempt, Again
Hoping the third time is the charm for both companies to merge in a way that appeases Washington regulators, T-Mobile and Sprint announced the latest attempt to merge into what would be a more formidable third-place challenger to AT&T and Verizon.
Deutsche Telekom AG, the Bonn, Germany-based company that controls T-Mobile, and SoftBank Group Corp., the Tokyo-based owner of Sprint, agreed to a combination that values each Sprint share at 0.10256 of a T-Mobile share, the companies said in a statement Sunday. That ratio values Sprint at $6.62 a share based on T-Mobile’s Friday closing price of $64.52.
“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,” John Legere, the T-Mobile boss who will serve as chief executive officer of the combined entity, said in the statement. The changes will come faster than either company could do on its own, he said.
Operating as T-Mobile, the company would have about $74 billion in annual revenue and 70 million wireless subscribers. Verizon is the largest U.S. carrier with $88 billion in 2017 wireless revenue and 111 million subscribers, and AT&T would be No. 2 with $71 billion in wireless revenue and have 78 million regular subscribers.
The question isn’t the willingness of the companies, but compliance with regulators:
Sprint and T-Mobile first discussed a merger in 2014 but scrapped it because of concerns about regulatory challenges from the Obama administration. The companies expected to have a better shot at the merger under the Trump administration. SoftBank CEO Masayoshi Son met with Trump the month before he took office to talk up an investment in US businesses.
A few weeks later, T-Mobile’s Legere said he was open to “various forms of consolidation” when asked about a potential merger with Sprint and SoftBank under the Trump administration.
Related: T-Mobile and Sprint break up, again
But last November, after much speculation, the two companies issued a statement saying they had “ceased talks.”
“While we couldn’t reach an agreement to combine our companies, we certainly recognize the benefits of scale through a potential combination. However, we have agreed that it is best to move forward on our own,” Marcelo Claure, the Sprint CEO, said at the time.
Sprint and T-Mobile’s announcement is just the latest step in an ongoing movement towards telecom consolidation. AT&T (T) is in talks to acquire Time Warner (TWX), which owns CNN. The outcome of that $85 billion merger-in-the-making depends on a case in federal court, which is pending the decision of the judge.
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