On Sunday, Sprint and T-Mobile announced that the two telecom giants intend to merge. If the proposed merger is approved by both the companies’ shareholders and federal government regulators, it will reduce the number of wireless carriers in the United States from four to three.
If the merger does go through, the company would be based in Bellevue, Washington and would retain the T-Mobile name. John Legere, who is currently the CEO of T-Mobile, would hold the same title in the merged company. The same goes for Mike Sievert, who is right now the COO of T-Mobile. Deutsche Telekom, which is the majority shareholder of T-Mobile, would own 42% of the merged company, while Softbank — which is the majority shareholder of Sprint — would own 27% of the merged company.
The CEOs of Sprint and Softbank — Marcelo Claure and Masayoshi Son, respectively — would be members of the merged board of directors.
The two companies insist that, by merging, they will be able to lower prices for consumers and become more efficient through what they termed as “economies of scale.” At the moment, the two companies trail Verizon and AT&T, and they say that as one larger company they will be better able to deploy their upcoming 5G networks. Together, the two companies would have almost 100 million customers.
For a number of years now the two companies have been in and out of merger negotiations. In 2014, Sprint wanted to buy T-Mobile, but it did not happen. In May of 2017, negotiations between the two companies resumed. Later that year in September the two almost reached a deal, but Sprint pulled out of it a month later. A month after this, T-Mobile made its own offer to Sprint, but those talks ended fruitlessly as well.
Earlier this month, the two companies resumed negotiations on a deal that is rumored to be valued at around $26 billion. However, it is far from certain that regulators will approve the deal, because it would lower the number of carriers available to consumers. In 2011, regulators fought a proposed merger between AT&T and T-Mobile, and the deal eventually fell through.
Dil Bole Oberoi
