A few days ago, there were rumors that T-Mobile and Sprint will be formally announcing a merger agreement, after several attempts in the past to get the thing done. Well, just this weekend, the two major US wireless carriers have finally confirmed the deal, basically ending all speculation with regards to a tie up.
Because the merger deal between T-Mobile and Sprint is of the all stock kind, it is expected to go through regulatory approval. It goes without saying that getting the approval will be a massive challenge for all parties involved, not only because of the inherent difficulties of combining the third and fourth largest wireless carriers in the United States into one business entity, but also because T-Mobile and Sprint are owned by two international companies (Deutsche Telekom and SoftBank, respectively). And as seen with the regulators’ recent intervention of the proposed Broadcom and Qualcomm deal, things could similarly get complicated for the T-Mobile and Sprint merger agreement.
For the record, the combined business entity will take the T-Mobile brand name. John Legere, the chief executive officer of the old T-Mobile, will now become the CEO of the merged company. Similarly, Mike Sievert (the current chief operating officer of T-Mobile) will now be the COO of the new entity. Serving on the board will be current T-Mobile Chairman of the Board Tim Hottges (he will become Chairman of the Board of the combined carrier), Masayoshi Son (SoftBank’s CEO), and Marcelo Claure (Sprint’s CEO).
Although the deal has been announced, it will likely close some time in the first half of next year, that is taking into account some time allowance for the regulatory approval process. With regards to valuation terms, the merger agreement sets Sprint’s enterprise value at about $59 billion, while the merged company is at a $146 billion enterprise value. For some context, industry leader Verizon Wireless has a market cap of about $213 billion, while AT&T's at around $214 billion.
According to T-Mobile, its merger deal with Sprint should give the Uncarrier in a good position to start competing with the dominance Verizon Wireless and AT&T as the industry enters into the 5G era. Still, a few are a bit cautious with regards to the potential impact of narrowing what used to be the Big Four into a new Big Three. Indeed, while it is true that the deal would allow T-Mobile to narrow the gap between itself and the duopoly, others are concerned that the range of options for end users has now been further slimmed down.
To know more about the merger deal, you can refer to the official press release here.
