Sprint and T-Mobile have finally agreed to merge
The first half of 2018 saw Sprint (S) and its rival T-Mobile (TMUS) finally agree to merge in an all-stock transaction. According to the deal, each Sprint shareholder will receive 0.10 shares of T-Mobile. The combined entity is expected to be worth $146.0 billion. The companies expect to close the proposed merger of $26.5 billion by the first half of 2019 subject to regulatory approvals and other customary closing conditions.
By teaming up, T-Mobile and Sprint believe they can put more pressure on market leaders Verizon (VZ) and AT&T (T) to accelerate investment in 5G (fifth-generation) networks and cut prices for consumers. However, the proposal to merge T-Mobile with Sprint has elicited mixed reactions, with opponents arguing that combining Sprint and T-Mobile would reduce choices for wireless users, resulting in higher prices.
History of T-Mobile and Sprint merger attempts
This is the third time in the past four years that the two competitors have attempted to merge. Merger talks collapsed last year in November due to the tug-of-war over the ownership of the combined entity. Meanwhile, the first round of merger discussions in 2014 ended due to antitrust concerns.
However, both T-Mobile and Sprint, the third- and fourth-largest mobile operators, have a common goal: to come closer to their larger rivals AT&T and Verizon. In the first quarter, T-Mobile and Sprint gained 617,000 and 55,000 postpaid phone net customers, respectively. Meanwhile, AT&T and Verizon lost 22,000 and 24,000 postpaid phone net customers, respectively.