In a deal with broad implications for media and technology sectors, wireless carriers T-Mobile and Sprint have announced a $26 billion all-stock merger that creates a bulked-up rival to AT&T and Verizon.
The deal caps several years of starts and stops by the two companies, which last November had abandoned their latest effort to combine. Regulatory approval of a deal that takes the U.S. wireless business from four major competitors down to just three could be tricky to achieve. But the companies say they expect to get the OK of agencies including the FCC and the Department of Justice. In their view, the main virtue of the transaction is that it will create thousands of jobs, fortifying the U.S. in its competition with China to build a next-generation mobile network.
Combined, the new company would have nearly 100 million cell phone customers. Both Sprint and T-Mobile have been less active on the video front than their larger rivals in recent years, though T-Mobile unveiled plans last December for a skinny-bundle TV service. The merged entity, if approved, will be known as T-Mobile and run by current T-Mobile CEO John Legere.
One reason the third attempt at a merger finally came together was a solution was found for T-Mobile and Sprint’s ownership structures. T-Mobile parent Deutsche Telekom will own 42% of the combined company and control 69% of its voting rights. SoftBank Group, which controls Sprint, will own 27% of the company, with the remaining 31% owned by the public.
The deal announcement comes a day before both sides deliver closing arguments in the DOJ’s lawsuit aiming to block AT&T’s $85 billion acquisition of Time Warner. Despite the question marks about regulators’ views of the deal, the companies said they expect it to close by early 2019. Because of the likelihood of intense scrutiny by regulators, multiple publications reported that the transaction’s terms do not include the standard “breakup fee” paid by one side or another should a deal come undone.