T-Mobile and Sprint (Finally) Agree to Merge

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T-Mobile US, Inc. and Sprint Corporation announced on Sunday that the two companies will merge in an all-stock transaction valued at $26 billion.  Under the terms of the deal, Sprint, the smallest of the country’s four nationwide wireless carriers, will exchange 9.75 Sprint shares for one share of T-Mobile, the third largest nationwide carrier.  If approved by U.S. regulators, T-Mobile parent company Deutsche Telekom will own 42% of the combined company’s stock and Sprint parent SoftBank Group, whose largest shareholder is Japanese businessman Masayoshi Son, will own 27%.  The remaining 31% of the combined company’s stock will be held by the public.  T-Mobile, which has a market value of $55 billion, will control 69% of the merged entity’s voting stock and will appoint nine of its 14 board members. The two carriers expect the deal to close in the first half of 2019, after which it will be led by current T-Mobile CEO John Legere and remain headquartered in the Seattle, WA suburb of Bellevue.  In order to gain DOJ and FCC approval, Sprint and T-Mobile are touting increased competitiveness and the ability to fast-track a roll-out of 5G services if the two companies are allowed to join forces.  Sprint, which has  41 million subscribers and T-Mobile, which has nearly 59 million subscribers, believe they need greater economies of scale when it comes to network resources and spectrum in order to compete with Verizon (117 million subscribers) and AT&T (93 million subscribers).  Although the two companies currently have a combined debt of $60 billion,  they expect to achieve over $6 billion in run rate cost synergies once the merger is approved.

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