Economy

Third try for T-Mobile / Sprint merger

Third try for T-Mobile / Sprint merger

The combination values each Sprint share at 0.10256 of a T-Mobile share, the companies said in a statement on Sunday, or about US$6.62 a share based on T-Mobile's closing price last Friday of US$64.52.

Together, T-Mobile and Sprint would have some 90 million subscribers, still the third-largest carrier in the US, but also within striking distance of the next largest player, AT&T, with 93 million customers. "This particular deal will create a strong third player in the USA market".

That is bound to set off warning bells in Washington. Consumers worry a less crowded telecom field could result in higher prices, while unions are concerned about potential job losses.

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

Their first round of merger talks ended unsuccessfully in 2014 after the administration of then-U.S. President Barack Obama expressed antitrust concerns.

Shares of T-Mobile fell $4.80, or 7.4 percent, to $59.72 in afternoon trading Monday. Sprint is a deeply troubled company buried in debt and unable to consistently turn a profit. The companies were way late to 4G earlier this decade, and they lost customers to the big guys.

The deal still awaits regulatory approval and raises plenty of questions if you pay Sprint or T-Mobile for your service. But survival itself may not be enough to win over regulators. Should the U.S. government give them the thumbs-up, they want to be a single company by "no later than the first half of 2019". But the Justice Department was unimpressed and blocked the deal because it deemed it would harm competition.

Others say there could be a negative side to it as the two companies might discontinue discounts and special promotions to lure customers.

More news: Chris Taylor will be the Dodgers' everyday shortstop with Corey Seager out

The merger has a significant chance of being quashed by regulators. It has some of the highest prices for cell service in the developed world, and all those things we've learned to enjoy thanks to T-Mobile, like unlimited data or off-contract devices, simply don't exist. "We've been customers for a long time so hopefully, nothing changes", said Heidi Pardue, who said she had a friend who was let go from the corporate offices two months ago when Sprint cut about 200 jobs. T-Mobile CEO John Legere and Sprint CEO Marcelo Claure told CNN's Richard Quest on Monday that the deal won't harm consumers because T-Mobile has a reputation for offering low-priced plans.

Under Mr Legere's leadership, T-Mobile became the fastest growing carrier, gaining more than six million subscribers over the past three years, though the pace of that growth has steadily slowed.

The companies claim - as merging businesses always do - that the efficiencies gained by combining infrastructure will help them lower prices for customers. Back when a large portion of network traffic ran over those networks, it made less sense for T-Mobile and Sprint to combine. And the companies said that the combined company, New T-Mobile, will "employ more people than both companies separately and create thousands of new American jobs".

Sprint and T-Mobile plan to invest up to $40 billion in their merged network in the first three years, which executives said would drive more hiring and better service for customers. "We didn't go presell this deal, so Charlie is having conversations that we haven't had yet".

T-Mobile says it's confident regulators will approve the merger.

Yet the companies decided not to include a breakup fee in case the deal is scuttled. In an all-stock deal worth $26 billion.

"They need to be prepared to fight this in court", Miller said.


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