US operators T-Mobile US and Sprint have announced an agreement to merge in an all-stock combination. The combined company will be named T-Mobile, will initially serve some 127 million customers, and will be led by current T-Mobile US CEO John Legere.
The deal is an important step toward 5G for both companies, which were facing some big capex bills if they tried to do it alone. While the integration of the two companies' networks will be quite a task, the fact that they can combine their 5G buildout efforts at an earlier stage will surely help a lot.
Well, it will if the deal gets approved relatively quickly. So now that the companies have made up their minds, all eyes will turn toward the Trump administration's regulators and, umm, twitter. The last time T-Mobile US and Sprint were close to a deal, regulators threw ice water on the concept. There are reasons to expect the situation to be different this time, but there is plenty of uncertainty in just what the response will be.
As for the deal, each Sprint shareholder will receive 0.10256 T-Mobile share per Sprint share, which puts the total enterprise value of the combined company at $146 billion. DT's share of the company will be about 42%, while Japan's Softbank would own 27%, the rest being publicly traded. Synergies of about $6 billion in annual cost savings are anticipated.
One sector that probably would in some ways have preferred to not have a deal is the metro fiber infrastructure space, which would understandably like to build out four 5G backhaul networks rather than three. But on the other hand, what they might see is one effort start earlier with the funding to do it right rather than two efforts trailing the field and cutting corners.
This article was authored by Rob Powell and was originally posted on Telecomramblings.com
Rob Powell is founder & editor of Telecom Ramblings, which was set up in 2008. The website is dedicated to discussing trends and developments in the telecom industry.