T-Mobile proposes merger with Sprint to accelerate 5G rollout
T-Mobile US and Sprint Corp. announced Sunday that they have entered into a definitive agreement to merge in an all-stock transaction. The move could accelerate 5G rollout. T-Mobile’s president and CEO, John Legere, said, “With the capabilities and assets from Sprint, the New T-Mobile will be uniquely able to create a broad and deep 5G network nationwide in the first few years of the 5G innovation cycle—the years that will determine if American firms lead or follow in the coming 5G era.”
Legere would become CEO of the new merged company, which would be called T-Mobile. Mike Sievert, current chief operating officer of T-Mobile, will serve as president and chief operating officer of the combined company.
“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 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 blurring of lines refers to the convergence of wireless, broadband, and video markets, with, for example, Comcast adding wireless phone customers. “This isn’t a case of going from four to three wireless companies,” Legere said. “There are now at least seven or eight big competitors in this converging market.”
The two companies contend that neither standing alone could create a nationwide 5G network with the breadth and depth required to fuel the next wave of mobile Internet innovation in the U.S. and answer competitive challenges from abroad. They also contend that neither could AT&T or Verizon—short of kicking their existing customers off LTE or relying on mmWave spectrum. Moving customers from LTE would take years, they say, as would building the infrastructure necessary to accommodate the 2,000-ft transmission-distance limitations of mmWave signals.
In addition, the companies say, the combined company would offer more choice to rural Americans and broadband customers who now have few or no alternatives, and it would boost competition for business customers. Further, they say, the combined company would employ more than 200,000 people at the start and will invest $40 billion over the first three years—46% more than Sprint and T-Mobile spent combined over the past three years.
The Wall Street Journal reports that the combined companies now have roughly 80,000 full-time U.S. employees. It further reports that the deal would put the combined company in the same class as Verizon and AT&T, which reported about 116 million and 93 million wireless customers, respectively, at the end of 2017. T-Mobile and Sprint had roughly 59 million and 41 million, respectively.
Jörn Krieger at Broadband TV News reports that the combined companies would have around 127 million branded customers and revenues of around $76 billion, based on expected figures for 2018. He also notes that the respective majority shareholders Deutsche Telekom (62% of T-Mobile US) and Softbank (83% of Sprint) have signed off on the merger agreement, adding that the enterprise value of the new company would amount to about $150 billion.
