T-Mobile US and Sprint agreed to combine in a $26.5 billion merger, creating a wireless giant to compete against industry leaders AT&T and Verizon Communications.
Deutsche Telekom AG, the Bonn, Germany-based company that controls T-Mobile, and SoftBank Group, the Tokyo-based owner of Sprint, agreed to a combination that values each Sprint share at 0.10256 of a T-Mobile share, the companies said in a statement Sunday. That ratio values Sprint at $6.62 a share based on T-Mobile’s Friday closing price of $64.52.
The new company will use the T-Mobile name, with T-Mobile’s John Legere as chief executive officer and Mike Sievert at chief operating officer. The German company’s chairman, Tom Hoettges, will serve in that role at the combined company, and the board will include SoftBank Chief Executive Officer Masayoshi Son. The companies said they expect synergies of about $43 billion, with more than $6.5 billion on a run-rate basis.
“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 in the statement. Deutsche Telekom will end up with a 42 ownership stake while SoftBank will have 27 per cent. Sprint closed Friday at $6.50 a share.
The combination of Sprint and T-Mobile would create a company with about $74 billion in annual revenue and 70 million wireless subscribers. Verizon is the largest US carrier with $88 billion in 2017 wireless revenue and 111 million subscribers, and AT&T would remain No 2 with $71 billion in wireless revenue and 78 million regular subscribers. The latest negotiations, coming about five months after an earlier merger attempt collapsed, follow years of will-they-won’t-they deliberations. Previous negotiations broke down after the two sides couldn’t agree on how to structure control of the combined entity, people familiar with the matter said at the time.