Sprint and T-Mobile U.S. have disclosed that they have come to an agreement regarding a $26 billion merger deal. The two wireless telecommunication companies are convinced they will get the consent of regulators since the merger will result in the creation of jobs as well as assisting the United States in beating China with regards to building a mobile network based on the 5G wireless standard.
The deal comes after four years during which the two companies have held on-and-off discussions. The combined business will have around 127 million subscribers and will be in a better position of competing with the market leaders AT&T and Verizon. Currently the number of customers that Verizon has in the United States is 116 million while the number of AT&T’s customers is 93 million. During their first merger discussions in 2014, antitrust concerns resulted in no deal.
$40 billion investment
The name of the combined firm will be T-Mobile and is expected to put in an investment of $40 billion in the coming three years. This investment will be in the upgrading of networks in order to make way for 5G, a wireless standard which will possess the speeds that are necessary for Internet of Things, autonomous cars and drones.
According to sources the two wireless firms the deal will be completed in next year’s first half. In the event that the deal is blocked by regulators, Sprint will not be paid any breakup fee by T-Mobile. The two carriers are however optimistic that the regulators will see the benefits to consumers that would accrue from the merger.
“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…” John Legere, the chief executive officer of T-Mobile U.S., saidin a statement.
With regards to 5G readiness the United States is ranked behind South Korea and China by CTIA, an industry organization which represents players in the wireless communications sector of the U.S. China is targeting the deployment of 5G by 2020 and three wireless carriers have already made commitments.
A breakthrough in the talks came after Japan’s SoftBank Group, which controls Sprint and the majority owner of T-Mobile U.S., Deutsche Telekom, reached an agreement with regards to a structure which will would let the latter continue plans of consolidating the combined entity. Deutsche will take a 42% stake of the combined firm as well as nomin