American telecom companies T-Mobile US and Sprint have agreed to a $26.5 billion merger that will consolidate the number of major nationwide carriers to three. Shareholders from both companies have agreed to the merger, but regulators will still need to approve it.
The combined company will maintain their separate headquarters in the suburbs of Seattle and Kansas City, and will be known as T-Mobile. Current T-Mobile CEO John Legere will run the combined company, with T-Mobile COO Mike Sievert becoming the company’s president and COO. T-Mobile majority owner Deutsche Telekom will own 42 percent of the company and Sprint majority owner SoftBank will hold 27 percent, with the rest going to public shareholders. Sprint CEO Marcelo Claure and SoftBank CEO Masayoshi Son will sit on the company’s combined board.
In a statement announcing the news, the companies’ CEOs pitched the merger as necessary to ensure that the US stands at the forefront of implementing 5G wireless technology.
“No one company has the breadth and depth of clear spectrum truly required to do this quickly except New T-Mobile,” Legere said in a statement. “With Sprint’s incredible 2.5 GHz spectrum, T-Mobile’s nationwide 600 MHz and our other combined assets, together, we will build the highest capacity mobile network in US history with 30 times more capacity than T-Mobile today and speeds that are up to 100 times faster.”
The two companies were in merger talks for years, with Sprint being prepared to buy T-Mobile as early as 2014.
The deal is likely to undergo significant regulatory scrutiny, especially since the deal would narrow an already concise wireless market. A planned acquisition of T-Mobile by AT&T in 2011 was ultimately cancelled because of those concerns.
However, Claure pitched the wider scope of the industry at large, with new players like Comcast and Spectrum entering the wireless fray:
“This industry is no longer just four wireless companies,” Claure said. “Industry lines are blurring and wireless, videos, and broadband, they’re all converging. AT&T is now the number one TV provider in this country. Comcast entered wireless last year and added more postpaid phone customers than AT&T and Verizon combined. Charter is launching Spectrum Wireless this year, and more than one in 10 Americans already uses wireless as their only internet access. They have no home broadband at all. It’s not the big four any more, it’s the big seven or eight.”