The Strategist

T-Mobile to buy Sprint for $ 26 billion

05/02/2018 - 05:37

American mobile operator T-Mobile US Inc. signed an agreement to purchase Sprint Corp. for $ 26 billion. The competing companies are trying to unite for the third time in four years.

If the deal is approved by antitrust regulators, only three really big players will remain in the US wireless communications market.

T-Mobile and Sprint, as well as their holding companies, are striving for this deal to consolidate their positions in the US market before they begin the transition to the 5G standard. Deutsche Telekom is the owner of 63% of T-Mobile, and it is the third largest mobile operator in the US, while 85% of Sprint, which is the fourth largest, is controlled by the Japanese telecommunications company SoftBank.

The cost of the combined company will amount to $ 146 billion, and it can become a serious competitor for market leaders - AT&T and Verizon Communications Inc. In addition, T-Mobile and Sprint can significantly reduce their costs by combining operations. Verizon had 116 million wireless customers in the US at the end of 2017; 93 million customers chose AT&T, 59 million - T-Mobile, and 41 million - Sprint.

According to the terms of the transaction, Sprint shareholders will receive 9.75 shares of T-Mobile in exchange for each share owned by them.

The merged company will be called T-Mobile, and will be headed by current T-Mobile US CEO John Legere. Deutsche Telekom will receive 42% of the new T-Mobile and 69% of voting rights, as well as the ability to appoint 9 of the 14 directors, SoftBank - 27%; the remaining share will be placed on the open market.

The companies expect to complete the deal in the first half of 2019.

Previous merger negotiations through the exchange of shares ended in November 2017 after the companies could not agree on who would become the owner of the joint structure.

The parties may face opposition from US regulators, Dow Jones writes. In November 2017, the US Department of Justice initiated a lawsuit to block the $ 85 billion deal between AT&T and Time Warner. On Monday, the lawyers of the parties must make final statements.

Shares of Sprint in the preliminary bidding on Monday fell by 6.5%, quotes of securities T-Mobile increased by 1,2%.


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