T-Mobile and Sprint, two of the largest mobile phone operators in the US, announced a merger agreement on Sunday afternoon that will result in a firm valued at around 146 billion dollars.
The new company will be the “only one with the capacity to create a broad and deep 5G network nationwide,” said T-Mobile CEO John Legere in a video next to Sprint’s Marcelo Claure, published in his Twitter. In a joint statement, the operators said they will preserve the name of T-Mobile, will have a dual headquarters and will be a “force for positive change in the wireless, video and broadband industries in the US.”
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
Details about the operation, subject to regulation by the country’s authorities, are expected to be closed before the first half of 2019 “once they see their significant benefits,” each T-Mobile share will be worth the equivalent of 9.75 shares of Sprint.
According to market prices after the closure of Wall Street on Friday, Sprint is valued at about 26 billion dollars, and T-Mobile at around 55 billion. After the announcement this Sunday, Sprint’s shares were up more than 8% in electronic transactions and those of T-Mobile were up 0.66%
The sum of T-Mobile, a subsidiary of the German group Deutsche Telekom, and Sprint, controlled by the Japanese group SoftBank, gives rise to an estimated 100 million customers, which would place it second in the market behind the Verizon group if the process goes ahead.
A strong competitor
“This combination will create a fierce competitor with a scale (enough) to give more to consumers and companies in the form of lower prices, greater innovation and an unsurpassed network experience,” explained Legere, for whom the two firms have a DNA Similarity.
Just as both have opted for unlimited mobile plans, he revealed that they intend to reach another situation of “competitive rupture” by building the “best 5G network in the world”, something that neither of them “could create alone”, neither could Verizon nor AT & T in the “short term”.
Only the new T-Mobile, the operators insisted, will have enough capacity to lay the foundations of the 5G network in its early years, thanks to Sprint’s 2.5 GHz expansive spectrum, T-Mobile’s 600 MHz national and other assets.
AT & T and Verizon “have either to get their existing LTE clients out, which would take years, or use a type of spectrum that can carry the signal 2,000 feet (about 600 meters) from a cell site, and that’s almost impossible “that they can build a 5G network” quickly “in the US, the companies explained.
Mainly controlled by Deutsche Telekom
The new T-Mobile will be controlled by Deutsche Telekom, which owns 42% of the shareholders, compared to 27% of SoftBank and 31%, and Legere will remain as CEO, while Claure is part of 4 candidates nominated by the company. Japanese firm for the board of directors, which will consist of 14 people.