T-Mobile-Sprint merger update
Last week, the Committee on Foreign Investment in the US approved the proposed merger of T-Mobile (TMUS) and Sprint (S), according to the Wall Street Journal. This brings the two competitors a step closer to closing their $26 billion proposed merger deal. However, the transaction now needs approval from regulatory authorities, the Federal Communications Commission, and the Department of Justice.
US antitrust regulators are currently reviewing the proposed merger deal and have expressed concern over it reducing competition in the US telecom sector since other than the merged company, the sector would only include AT&T (T) and Verizon (VZ) as the other major wireless service providers. Concerns also included rising prices from wireless carriers and possible job losses after the merger.
Postpaid phone net additions
T-Mobile and Sprint have defended the merger, stating that the entry of top cable companies like Charter Communications (CHTR) and Comcast (CMCSA) into the mobile space shows that there will still be plenty of competition in the wireless space. The companies also argued that the proposed merger deal could enhance their 5G (fifth generation) network scale, boost cost synergies, as well as improve their competitive position against AT&T and Verizon. The chief financial officer of T-Mobile believes that the proposed merger deal with Sprint “will close as early as the first quarter of 2019.”
Sprint and T-Mobile have the common aim of coming closer to the market leaders, AT&T and Verizon. In the third quarter, T-Mobile, Verizon, and AT&T added 774,000, 295,000, and 69,000 postpaid phone net customers, respectively. Meanwhile, Sprint lost 34,000 postpaid phone net customers in the same period.