Sprint, T-Mobile Merger Imminent

**Editor’s Note: Which is America’s top wireless network? Click here to see what we discovered. Or click here for a recap of the biggest communications mergers in Q2 2014.**

Will this finally be the week that Sprint and T-Mobile formally announce their intention to merge?

SoftBank, Sprint’s majority owner, has reportedly reached a “basic agreement” to buy T-Mobile USA’s counterpart, Deutsche Telekom. A handful of details still need to be worked out, reports Nikkei, but this much, the site says is known: SoftBank of Japan will buy more than have of T-Mo shares from DT, which controls about two-thirds of the Magenta Network’s stock. The estimated price for that portion is US $16 billion.

A combined Sprint-T-Mobile would have approximately 100 million subscribers, making it a serious rival to both AT&T and Verizon Wireless; of course, it still would need government approval, something U.S. regulators blocked nearly three years ago when AT&T tried to buy T-Mobile, citing a preference for a “big four” system. This merger would reduce it to the “big three,” but with all being roughly the same size, the acquisition might be seen with less trepidation.

One of the details still likely being discussed is a so-called “breakup fee.” If regulators reject it, T-Mobile reportedly wants $2 billion in compensation, expecting it could face competitive challenges because investors will probably hold off pumping more money into the company while the regulatory process runs its course.

No word yet what the new company might be called. T-Mobile has been on a roll lately, adding more new customers in the first quarter than AT&T and Verizon Wireless combined – making the T-Mo name seem attractive. But Sprint, while struggling to keep customers as of late, has a longer history in telecom.

Follow senior online managing editor @Craig_Galbraith on Twitter.

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