After what felt like hundreds of potential negotiations and talks over the past few years, T-Mobile and Sprint have formally announced they officially plan to merge. The deal, worth $26 billion, will see the two companies form to create an even more monumental threat against the likes of Verizon and AT&T, especially in the race to get 5G on the market.
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
According to the press release, the newly formed company will be called T-Mobile, with current CEO John Legere remaining in his current position and T-Mobile COO Mike Sievert retaining both his current slot and taking over as president.
As for the two carriers’ parent companies, Deutsche Telekom, who owns a majority of T-Mobile, will have a 42 percent stake in the new company. Meanwhile, SoftBank, Sprint’s majority owner, will have a 27 percent stake. Both the CEO of SoftBank and Sprint will each have places on the new company’s board.
The company will be headquartered in Bellevue, Washington and serve nearly 100 million customers when first established.
With a combined value of $146 billion, T-Mobile and Sprint aim to rapidly create a nationwide 5G network with their new company. “The new company will be able to light up a broad and deep 5G network faster than either company could separately,” according to the release. “-Mobile deployed nationwide LTE twice as fast as Verizon and three times faster than AT&T, and the combined company is positioned to do the same in 5G with deep spectrum assets and network capacity.”
5G seems to be a main focal point of this deal. Yes, it will allow T-Mobile and Sprint to both take on Verizon and AT&T on a much more level playing field, but it also means deploying new technologies before their biggest competitors. That’s something both parties can benefit off greatly, so it makes sense to see the companies agree to terms at this point in time.
Additionally, the deal will create a company pegged with lower costs, greater economies of scale, and resources to provide a better overall experience for US customers. The new T-Mobile will also employ much more people and create thousands of new jobs.
“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,” said John Legere. “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.”
“The combination of these two dynamic companies can only benefit the U.S. consumer. Both Sprint and T-Mobile have similar DNA and have eliminated confusing rate plans, converging into one rate plan: Unlimited,” said Marcelo Claure. “We intend to bring this same competitive disruption as we look to build the world’s best 5G network that will make the U.S. a hotbed for innovation and will redefine the way consumers live and work across the U.S., including in rural America. As we do this, we will force our competitors to follow suit, as they always do, which will benefit the entire country. I am confident this combination will spur job creation and ensure opportunities for Sprint employees as part of a larger, stronger combined organization, and I am thrilled that Kansas City will be a second headquarters for the merged company.”
Of course, with all that being said, T-Mobile and Sprint still need to pass US regulation. Back in 2011, US regulators blocked AT&T from buying T-Mobile entirely due to creating a less competitive market. Things have evolved in our government greatly over the last seven years so it remains unclear how our current administration will handle the carriers’ plans.
That being said, expect to hear a lot more surrounding today’s blockbuster news in the weeks to follow. We’ll keep you posted.
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