T-Mobile, Sprint have agreed to merge into a $146 billion company to compete with AT&T, Verizon in 5G. Next stop, regulatory.
Sprint and T-Mobile announced today that they are merging into one $146 billion company, setting the company up to compete against AT&T and Verizon in 5G and the internet of things. If the deal passes regulatory approval, the U.S. will have three large carriers instead of four.
The combined company will be called T-Mobile, headquartered in Bellevue, Wash. A second headquarters will remain in Sprint’s home of Overland Park, Kan. T-Mobile US’ CEO John Legere will take on the chief executive officer role in the new company and T-Mobile US COO Mike Sievert will become the president and chief operating officer of the combined company.
Tim Höttges, currently T-Mobile chairman, will become chairman of the new company’s board; also serving on the board will be SoftBank’s Masayoshi Son and Sprint CEO Marcelo Claure.
The combined company will have more than 127 million customers, with Sprint’s 2.5 GHz spectrum with T-Mobile’s nationwide 600 MHz spectrum. T-Mobile US and Sprint claim they can compete with AT&T and Verizon by being more cost-competitive and nimble and in a press release, attacked their larger competitors’ 5G strategies.
“To build nationwide 5G, they [AT&T and Verizon] either have to kick current customers off LTE, which would take years, or use a type of spectrum (millimeter wave) that can only carry a signal 2,000 feet from a cell site — versus multiple miles for other spectrum — making it nearly impossible for either of them to create a truly nationwide 5G network quickly,” said T-Mobile US and Sprint press release.
The T-Mobile, Sprint website claims the new T-Mobile will have “the right mix of available spectrum, financial strength and management expertise to create the first nationwide 5G network.” T-Mobile said, in its press release, that it expects the combined company’s network will deliver 15x faster speeds on average nationwide by 2024 — compared with T-Mobile’s current speeds.
“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 John Legere in a press statement.
Sprint’s enterprise was estimated at $26 billion based on stock price on April 27. The transaction will be an all-stock transaction, with T-Mobile valued at $55 billion. Deutsche Telekom, T-Mobile’s parent company, will own 42% of the new company, while Softbank (Sprint’s parent company) will own 27%, according to the Wall Street Journal.
The combined company is pushing big plans to make its case before regulatory scrutiny. The new T-Mobile says it will invest $40 billion in its new network and business in the first three years. “We intend to bring this same competitive disruption as we look to build the world’s best 5G network that will make the U.S. a hotbed for innovation and will redefine the way consumers live and work across the U.S., including in rural America,” said Claure in the press statement.
