Local

Sprint And T-Mobile Agree To Merge, Take On AT&T, Verizon

T-Mobile and Sprint reached a $26.5 billion merger agreement Sunday that would reduce the U.S. wireless industry to three major players — that is, if the Trump administration’s antitrust regulators let the deal go through.

The nation’s third- and fourth-largest wireless companies have been considering a combination for years, one that would bulk them up to a similar size as industry giants Verizon and AT&T. But a 2014 attempt fell apart amid resistance from the Obama administration.

The combined company, to be called T-Mobile, would have about 127 million customers. Consumers worry a less crowded telecom field could result in higher prices, while unions are concerned about potential job losses.

In a conference call with Wall Street analysts, Sprint CEO Marcelo Claure acknowledged that getting regulatory approval is “the elephant in the room,” and one of the first things the companies did after sending out the deal’s news release was to call Ajit Pai, chairman of the Federal Communications Commission.

The companies stressed that they plan to have more employees following the combination, particularly in rural areas, than they do as stand-alone companies now.

They also emphasized that the deal would help accelerate their development of faster 5G wireless networks and ensure that the U.S. doesn’t cede leadership on the technology to China.

And they said the combination would allow them to better compete not only with AT&T and Verizon but also with Comcast and others as the wireless, broadband and video industries converge.

“This isn’t a case of going from 4 to 3 wireless companies — there are now at least 7 or 8 big competitors in this converging market,” T-Mobile chief executive John Legere said in a statement. He would be the CEO of the combined company.

The all-stock deal values each share of Sprint at slightly more than 0.10 T-Mobile shares. Deutsche Telekom, T-Mobile’s parent, would own about 42 percent of the combined company. Japan’s SoftBank, which controls Sprint, would own 27 percent, and the remainder would be held by the public.

The companies said they expect the deal to close by the first half of 2019 and would result in about $6 billion in annual cost savings.

Investors have been anticipating a deal like this for some time. In addition to the thwarted attempt three years ago, the two companies were poised to combine in October, but the deal was called off after what analysts said was a disagreement over control of the combined company.

The deal will have to be reviewed by the Justice Department and the FCC.

National carriers had not been able to get a deal through under President Barack Obama. But the FCC in September deemed the wireless market “competitive” for the first time since 2009, which some analysts say could make it easier to present a deal.

The 5G aspirations are at the heart of the agreement, and the new technology could allow companies to provide faster service to people’s homes.

Sprint’s Claure likened going from 4G to 5G to switching from black-and-white television to color. The combined company plans to invest up to $40 billion in its network in the first three years, which executives said would drive more hiring and better service for customers.

Sprint has a lot of debt and has posted a string of annual losses. It has cut costs and made itself more attractive to customers, BTIG Research analyst Walter Piecyk said, but hasn’t invested enough in its network and doesn’t have enough airwave rights for quality service in rural areas.

T-Mobile, meanwhile, has been on a yearslong streak of adding customers. After the government nixed AT&T’s attempt to buy the company in 2011, T-Mobile led the way in many consumer-friendly changes, such as ditching two-year contracts and bringing back unlimited data plans.

Consumers are paying less for cellphone service thanks to T-Mobile’s influence on the industry and the resulting price wars.

Verizon and AT&T have been expanding their video-content businesses, while cable companies have been moving into wireless. That allows a single company to combine home and wireless internet and use content to support the communications businesses.

Comcast, the cable giant that finished buying NBCUniversal in 2013, offers customers wireless service by reselling access to Verizon’s network. So does another dominant cable company, Charter.

(AP)

Click to add a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Local

More in Local

d4de519e0f74cd183f5241a576de37bb.jpg

Democrats Promise to Revive The Russia Probe If They Win The House

adminOctober 22, 2018
b94a75efd845fa42a81d7426cfb572c9.jpg

ARRESTED AGAIN: Pizza Deliveryman Arrested By ICE At Brooklyn Military Base Jailed on Domestic Violence Charges

adminOctober 22, 2018
9295a5b0e4e835d10a34bb6203d643fe.jpg

SHIKSA?! UN Ambassador Nikki Haley Pokes Fun at Herself at NY Charity Event

adminOctober 22, 2018
8efc733738742a2a6afd4c4915afa913.jpg

NEW TOOL: Credit Card Limitations For Get Refusers In Israel

adminOctober 22, 2018
39dacafd4f9446e07b6b9c1080bc25da.jpg

SHE CAN STAY: Israel’s Supreme Court Overturns Deportation of American BDS Activist Lara Alqasem

adminOctober 19, 2018
e9c580e4876a2d0e8bd5dfacc570fe2c.jpg

U.S. Navy Helicopter Crashes On USS Ronald Reagan In Asia, Sailors Hurt

adminOctober 19, 2018
40d09691d037c70f0175319962c4fd29.jpg

Trump Organization Sues Man Who Died In Trump Tower Fire

adminOctober 19, 2018
01f7e6c814135f9890e7ba67550f5c56.jpg

Twitter Releases Archive of 10 million Tweets From State-Backed Troll Accounts

adminOctober 18, 2018
4de607e38cb91049f817c5fea9d76ce2.jpg

Trump Asks Cabinet To Cut Next Year’s Budgets By 5 Percent

adminOctober 18, 2018