After spending years on deciding whether or not they should tie up, Sprint and T-Mobile have finally merged together. This morning, two major telecom providers of the USA have finally signed their tie up an agreement. However, it will rather be an all-stock transaction based merger which makes it a subject to regulatory approval as reported by TechCrunch. This will also mean that the merger will prove to be a difficult process as it will be tying up two internationally recognized telecom carriers that occupy the third and fourth place in the US. And now they will form one single unit working together.
Also, both the companies are known to have considerable stakes from renowned international organizations. A prominent part of T-Mobile comes under the control of Deutsche Telecom while Sprint is significantly under the control of SoftBank. This makes the merger appear quite complicated and makes it rather unclear what will be the result of the tie up.
As per a report from Bloomberg, 42% of the ownership of the merger will come under the control of Deutsche Telecom and about 27% will be taken over by SoftBank. What appears most unclear is how the newly merged company will handle their 5G network plans. While T-Moble has already announced it will be working towards making its 5G network stay competitive with other companies such as AT&T and Verizon have already started taking steps towards the expansion of their next generation 5G network. Notably, even after announcing its plan to come up with 5G soon, T-Mobile has not mentioned any carrier choice for its customers.
“The New T-Mobile will have the network capacity to rapidly create a nationwide 5G network with the breadth and depth needed to enable U.S. firms and entrepreneurs to continue to lead the world in the coming 5G era, as U.S. companies did in 4G,” mentioned T-Mobile in an announcement and further explained, “the new company will be able to light up a broad and deep 5G network faster than either company could separately. T-Mobile deployed nationwide LTE twice as fast as Verizon and three times faster than AT&T, and the combined company is positioned to do the same in 5G with deep spectrum assets and network capacity.”
Notably, the companies were working towards finalizing its deal and were to make it on Friday but they finally announced their tie up today. This deal sets an enterprise value of Sprint at around $59 billion while both the companies combined together gain an enterprise value of $146 billion. But does this combined enterprise value really make the company stand stronger? It is still behind AT&T which rules the telecom provider segment with an enterprise value of $214 billion and the next to it stands Verizon with a value of $213 billion, as it was last noted.
The transaction still requires regulatory approval but it is not supposed to stay pending after the first half of 2019, as the company announced.