April 29 (UPI) — Sprint and T-Mobile — two of the top four wireless phone carriers in the United States — announced Sunday they have agreed to an all-stock merger that values the new provider at $146 billion.
Deutsche Telekom AG, the German-based company that controls T-Mobile, and SoftBank Group Corp., which is Tokyo-headquartered and is Sprint’s majority owner, agreed to combine forces, according to a press release. T-Mobile paid $26.5 billion in stock for Sprint with the total value including debt.
The U.S. company will be called T-Mobile. It will be headquartered in Bellevue, Wash. — which is where T-Mobile is based — with a second headquarters at Sprint’s site in Overland Park, Kan.
John Legere, current president and chief executive officer of T-Mobile, will serve as Chief Executive Officer, and Mike Sievert, current chief operating officer of T-Mobile, will be president and chief operating officer of the combined company.
Current Sprint Chief Executive Officer Marcelo Claure will serve on the board of the new company.
“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,” Legere said. “As industry lines blur and we enter the 5G era, consumers and businesses need a company with the disruptive culture and capabilities to force positive change on their behalf.”
In the deal, Sprint is valued at 0.10256 per T-Mobile share, or $6.62 a share based on T-Mobile’s Friday closing price of $64.52. This represents a total implied enterprise value of approximately $59 billion for Sprint.
The companies said they expect a savings of about $43 billion with the synergy but are planning $40 billion in its new work and business in the first three years. The increase spending is 46 percent more than T-Mobile and Sprint spent combined in the past three years.
Deutsche Telekom, the majority stockholder of T-Mobile and partly owned by the German governmen, will control 42 percent of the combined company and SoftBank, which owns 85 percent of Sprint, will have 27 percent. The public will hold the remaining 31 percent.
The T-Mobile and Sprint board of directors have approved the transaction.
Among the four carriers through 2017, Verizon is No. 1 with 150.5 million U.S. device subscribers, followed by AT&T at 141.6 million, T-Mobile at 72.6 million and Sprint at 54.6 million, according to PrepaidPhoneNews. T-Mobile earlier acquired MetroPCS, and Sprint owns Boost Mobile and Virgin Mobile.
Comcast, a cable TV provider and owner of NBC, also has entered the cellphone provider market.
“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,” Legere said. “And in 5G, we’ll go from 0 to 1. Only the New T-Mobile will have the capacity to deliver real, nationwide 5G. We’re confident that, once regulators see the compelling benefits, they’ll agree this is the right move at the right time for consumers and the country.”
Marcelo Claure said the difference between the 4G and 5G is like going from black-and-white television to color.
“The combination of these two dynamic companies can only benefit the U.S. consumer,” Claure said. “Both Sprint and T-Mobile have similar DNA and have eliminated confusing rate plans, converging into one rate plan: Unlimited. We intend to bring this same competitive disruption as we look to build the world’s best 5G network that will make the U.S. a hotbed for innovation and will redefine the way consumers live and work across the U.S., including in rural America.
“As we do this, we will force our competitors to follow suit, as they always do, which will benefit the entire country. I am confident this combination will spur job creation and ensure opportunities for Sprint employees as part of a larger, stronger combined organization.”
The deal still needs to be cleared by U.S. regulators.
In November, the companies were close to a merger agreement before SoftBank CEO Masayoshi Son pulled out after weeks of talks.
In 2014, a planned merger between AT&T and T-Mobile was opposed by regulators and ultimately canceled.
AT&T is seeking Justice Department approval to acquire Time Warner, which owns CNN. And last year, Verizon acquired Yahoo.
T-Mobile, which was founded in 1990 and purchased by Deutsche Telekom AG in 2001, has 51,000 employees. Sprint, which traces its roots to Brown Telephone Company in 1899, merged with GTE in 1982 and bought by SoftBank in 2013, has 28,000 employees.
T-Mobile had total revenue of $49.6 billion in 2017, according to Nasdaq, and Sprint’s revenue was $33.3 billion, Nasdaq reported.