Sprint and T-Mobile have agreed on a $26 billion merger — the third time that the two companies have tried to combine forces in recent years.
According to The Wall Street Journal, if antitrust enforcers allow the deal to go through, the U.S. wireless market would be dominated by three national players. The companies are hoping to close the deal in the first half of 2019.
Sprint currently has a market value of $26 billion, while T-Mobile has a market value of $55 billion. The two companies have about $60 billion of combined net debt.
The all-stock deal would involve T-Mobile exchanging 9.75 Sprint shares for each T-Mobile share. T-Mobile parent Deutsche Telekom will own 42 percent of the combined company — which will be known as T-Mobile — and Sprint parent SoftBank Group will own 27 percent. The remaining 31 percent will be held by the public.
Deutsche Telekom would also control voting rights over 69 percent of the company. It would also appoint nine of its 14 directors, with T-Mobile CEO John Legere running the new company.
The merger would create a wireless provider with nearly 100 million cellphone customers, second in the U.S. to Verizon. But the deal still has to pass Washington’s antitrust enforcers. In fact, sources say that the potential deal doesn’t include a break-up fee in case the merger is blocked.
So far, the government hasn’t been a fan of large mergers. In fact, the Justice Department sued AT&T in November to block its $85 billion acquisition of Time Warner, and lawyers for the two sides are scheduled to make closing arguments today (April 30).
And in 2011, the government forced AT&T and T-Mobile to abandon a planned merger.
But while the Federal Communications Commission has insisted in the past that having four national providers in the U.S. was necessary to ensure competition and lower prices for consumers, it’s possible Sprint and T-Mobile can argue that times have changed.
“This isn’t a case of going from 4 to 3 wireless companies — there are now at least 7 or 8 big competitors in this converging market,” Legere said.
The companies have also promised to add to their combined staff of roughly 80,000 full-time U.S. employees once the deal closes.
“This is one of those few mergers that are actually going to be net job positive from the get-go,” Sprint CEO Marcelo Claure said. “We’re gonna go build an amazing network that is good for the economy.”