uploads///Telecom Q Postpaid Phone Net Additions

Concerns Surrounding the T-Mobile-Sprint Merger


Dec. 4 2020, Updated 10:52 a.m. ET

T-Mobile and Sprint merger concerns

On April 29, T-Mobile (TMUS) and Sprint (S), the third- and fourth-largest US mobile operators, announced a merger aimed to raise competition with dominant players Verizon (VZ) and AT&T (T) and creating a stronger network with improved spectrum and higher cost synergies.

The proposed merger deal is an all-stock offer for Sprint shareholders that would give Sprint an implied enterprise value of $59.0 billion. The combined entity would be worth an estimated $146.0 billion. The companies are hoping to close the transaction by the first half of 2019.

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T-Mobile believes that integrating T-Mobile and Sprint networks would take two to three years and would look similar to MetroPCS’s integration with T-Mobile. Additionally, getting regulatory approval for the companies is a concern, as a proposed deal between Sprint and T-Mobile would reduce the number of major national wireless carriers from four to three: Verizon, AT&T, and the new T-Mobile. Therefore, the Federal Communications Commission and the US Department of Justice would need an extremely compelling case to revise its initial assessment of competitive forces in the telecom industry.

History of the T-Mobile and Sprint merger

These talks mark the third time in the last four years that Sprint and T-Mobile have attempted combining. One reason behind the merger discussions’ collapse last November was disagreement on ownership of the combined company. Meanwhile, the first round of merger discussions in 2014 ended due to antitrust concerns.

However, both T-Mobile and Sprint have a common aim: to come closer to the market leaders, AT&T and Verizon. In the first quarter, T-Mobile and Sprint gained 617,000 and 55,000 postpaid phone net customers, respectively, while Verizon and AT&T lost 24,000 and 22,000.

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