T-Mobile and Sprint, the third and fourth largest wireless carriers in the United States, have been discussing a merger, and the deal might materialize in the near future. According to the latest reports, the two carriers could soon agree on tentative terms for the merger and announce the deal as soon as next month.
As a reminder, T-Mobile is under the umbrella of Deutsche Telekom, while Sprint is owned by Softbank. Under the terms of the deal, Deutsche Telekom would have a majority stake in the new company stemming from the T-Mobile-Sprint merger, while Softbank would get between 40 and 50 percent.
The purported deal comes at a time when 5G is gaining ground and companies are investing in the technology, with wireless carriers racing to be the first to implement it and enable faster wireless data transfers. If they join forces, T-Mobile and Sprint would have a better chance to compete against rivals AT&T and Verizon and could be able to deploy 5G sooner than they would on their own.
Should the merger prove successful, the combined company would boast more than 130 million subscribers nationwide, inching closer to the subscriber base of Verizon and AT&T. The combined company would also have greater revenue and would be able to cut more costs, analysts note.
Sprint and T-Mobile have been negotiating a merger for more than four months now, and according to a new report from Reuters, T-Mobile CEO John Legere would be in charge of the combined company. Citing sources close to the matter, Reuters says that Sprint and T-Mobile could agree on a merger by the end of October, though the deal is not certain just yet.
Even if T-Mobile and Sprint agree on all details and push through with the deal, the merger would still be subject to regulatory scrutiny. On the other hand, the deal has better chances of succeeding now. The two wireless carriers have been eyeing a merger for a long time, but a few years ago, under the Obama administration, the FCC expressed concerns about a U.S. telecom market consolidation and indicated that it would not approve such a deal.
Back in 2014, when the idea of a deal between Sprint and T-Mobile first emerged, things would have been a lot different. T-Mobile was smaller and not nearly as successful, and Sprint would have swallowed it. Since then, however, T-Mobile grew stronger and overpassed Sprint, changing the equation altogether. If Sprint would have swallowed T-Mobile a few years back, today it’s no longer the case, as T-Mobile would get the upper hand – hence Deutsche Telekom’s majority stake in the combined company.
T-Mobile currently has a $52 billion market capitalization, while Sprint stands at $32 billion. Although the deal still faces regulatory scrutiny, the Trump administration is expected to be more merger-friendly than the Obama administration before it, and the deal has better chances of going through.
[Featured Image by Mark Lennihan/AP Images]