Mooted for many years, the merger between T-Mobile and Sprint has finally been announced. Expected for most of this decade, the $26.5 billion merger will bring the third largest US carrier (T-Mobile) and fourth largest (Sprint) together.
The combined company will form a united front to combat Verizon and AT&T, the nation’s respective first and second largest carriers.
Around a decade ago, Sprint was the third largest carrier and T-Mobile’s long term future was in doubt. Since then, T-Mobile has turned its fortunes around and the inspired leadership of CEO John Legere. Part salesman, part business genius, Legere took the fight to Verizon and gobbled plenty of market share in the process.
Sprint’s fortunes have dwindled, so it’s no surprise that T-Mobile’s name will be used for the merged company. It’s also no surprise that Legere will retain CEO duties for the unified brand. Mike Sievert (Legere’s deputy) will stay as COO.
In the purchase, each Sprint share will convert to 0.10256 of a T-Mobile share. Upon T-Mobile’s Friday close, the company values Sprint’s shares at $6.62 per share. Deutche Telekom (T-Mobile owner) will receive 42% of the company, while SoftBank (Sprint owner) will get 27%. The remaining 31% will remain open to public.
“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience – and do it all so much faster than either company could on its own.”-John Legere, president & CEO T-Mobile
T-Mobile and Sprint had $74 billion in combined annual revenue last year. If the merged company can match that and continue T-Mobile’s growth, it will get close to competing with Verizon evenly. Verizon’s annual revenue last year stood at $88 billion.
The newly formed merger will likely see T-Mobile and Sprint surpass AT&T as the second largest carrier. AT&T recorded $71 billion in 2017 revenue.
Of course, all this depends on regulatory approval and that may be a tough hurdle to overcome. The FCC and DOJ have already shut down this merger once, stopping talks in their tracks during 2014.