T-Mobile, Sprint Announce A Plan For Merger | KCUR

T-Mobile, Sprint Announce A Plan For Merger

Apr 29, 2018
Originally published on April 30, 2018 7:24 am

Updated at 3:07 p.m. ET

T-Mobile and Sprint have reached a "definitive agreement" to merge in an all-stock deal, which would create a new company with a total value of $146 billion, based on current stock prices.

The two companies — the third- and fourth-largest U.S. wireless carriers, respectively, behind Verizon and AT&T — have been trying to merge for years. But previous efforts have failed, often falling apart under intense regulatory scrutiny.

This deal still needs regulatory approval, from both the Justice Department, which will weigh antitrust concerns, and the Federal Communications Commission, which will consider whether the deal is in the public interest.

U.S. regulators have recently challenged AT&T's $85 billion deal to purchase Time Warner Inc., Reuters notes, and "are expected to grill Sprint and T-Mobile on how they will price their combined wireless offerings."

The companies say merging will allow them to lower prices and put more pressure on Verizon and AT&T.

"The new company will be able to light up a broad and deep 5G network faster than either company could separately," the companies said in a press release.

In a video announcement, the CEOs of T-Mobile and Sprint emphasized the potential of 5G. They also described the merger as a job creator, and emphasized the competition in wireless — anticipating antitrust challenges to their plan to combine.

In general, Sprint and T-Mobile may be hoping for a more favorable hearing from regulators this time around.

This past fall, the FCC approved a report that said the mobile wireless industry has "effective competition."

"Most reasonable people see a fiercely competitive marketplace," FCC Chairman Ajit Pai said. "To those who want to impose more regulation upon the wireless marketplace, the reality of effective competition is an inconvenient truth."

Responding to the same report, however, FCC Commissioner Jessica Rosenworcel, however, mentioned the possibility of a merger between two of the major companies.

"Any transaction before us will require someone to explain how consumers will benefit, how prices will not rise, and how innovation will not dissipate in the face of so much more industry concentration," she said.

NPR's Alina Selyukh has noted that it's not clear how consumers would be affected by a Sprint/T-Mobile merger.

"Consumer advocates have criticized [such a] merger, pointing to the declines in the cost of service since a merger was shot down in 2014," she wrote last fall. "In May [2017], when rumors surfaced of a new attempt to combine the carriers, the former FCC chairman and former antitrust chief from the Obama administration penned a column that warned that prices would rise if a fourth player disappeared."

"Absorbing Sprint, T-Mobile would take on a messy network and debt," Alina writes. "But combined, the two would rise into a No. 3 much closer to AT&T and Verizon in terms of the overall number of subscribers."

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T-Mobile and Sprint have agreed to merge. It is not clear yet whether regulators will approve. But if the deal goes through, it would mean the big four telecom companies would become the big three. Here's NPR's Camila Domonoske.

CAMILA DOMONOSKE, BYLINE: John Legere, the colorful CEO of the country's third-largest wireless carrier, is wearing his trademark hot-pink T-shirt, plus a leather jacket with another bright-pink T-Mobile logo.


JOHN LEGERE: I'm back.

DOMONOSKE: And, he's grinning.


LEGERE: You know what these videos mean. It means I have big news to share.

DOMONOSKE: The CEO of the country's fourth-largest carrier jumps in.


MARCELO CLAURE: Actually, this time, we have big news to share.

DOMONOSKE: Marcelo Claure looks positively staid in his Sprint T-shirt and blazer, but he's grinning, too.


LEGERE: Today we're announcing that T-Mobile and Sprint have reached a definitive agreement to come together and form a new, stronger company.

DOMONOSKE: Their big news is not exactly surprising. The two companies have been considering a merger for years, but previous talks have always been dropped, in part because of intense skepticism from federal regulators. Now the two companies have a plan. It's an all-stock deal that would create a new T-Mobile worth more than $140 billion. T-Mobile would be taking on debt from Sprint, but the companies say the merger will allow them to reduce prices and compete more effectively with Verizon and AT&T. Sprint and T-Mobile also say together they could invest in a nationwide 5G network that could compete with broadband. But the deal still needs to be approved.

DIANA MOSS: This will get a very, very hard look.

DOMONOSKE: Diana Moss is the president of the American Antitrust Institute. She says the Department of Justice and the Federal Communications Commission will check to see if the savings for consumers outweigh the loss of competition.

MOSS: And those efficiencies, they'd have to be merger-specific - couldn't get them any other way - and they would have to be verifiable. That is a heavy, heavy lift.

DOMONOSKE: T-Mobile and Sprint hope the government will call it in their favor, but it's still not clear what kind of reception they'll get from regulators. Camila Domonoske, NPR News. Transcript provided by NPR, Copyright NPR.