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According to the CEO of T-Mobile, the company has reached a “definitive agreement” with Sprint to create a new company.
After years of negotiations punctuated by two breakups, the proposed all-stock deal values Sprint at about $59 billion and the combined company at $146 billion.
“I’m excited to announce that @TMobile & @Sprint have reached an agreement to come together to form a new company – a larger, stronger competitor that will be a force for positive change for all US consumers and businesses!” John Legere tweeted.
He also tweeted out a 7-minute long video explaining how the new company “will build the highest capacity mobile network in US history.”
The video focuses extensively upon creating a nationwide 5G network. "It’s critical America leads the path to 5G, just as we did with 4G," Legere tweeted.
“Together with Sprint’s enterprise capabilities and the new company’s combined resources, we can create a real alternative and give businesses and government customers real competition,” said Sprint CEO Marcelo Claure. “And the new company plans to hire more people to help us compete.”
“The New T-Mobile will create thousands of jobs,” Legere said.
The combined company does plant to keep a second headquarters in Overland Park.
"#KC has been a great home and will continue to thrive as a 2nd headquarters so that @Sprint and @TMobile can leverage the BEST talent from both orgs," Claure said.
Legere said that he will be the CEO of the new company and that Claure will be President and COO.
The new company will still be named T-Mobile, although Legere refers to it as "New T-Mobile" to avoid confusion.
Claure said that more details will be made available in the coming weeks.
Sprint and T-Mobile first discussed a merger in 2014 but scrapped it because of concerns about regulatory challenges from the Obama administration.
A report that the deal was getting close drove up Sprint's stock price by 8 percent on Friday and T-Mobile's price edged up as well. The stock price for SoftBank, a Japanese conglomerate with a majority stake in Sprint, rose by 3 percent.
The supersized company would have nearly as many wireless subscribers as Verizon and AT&T have now.
U.S. Senator Jerry Moran (R -- Kansas) released a statement following the announcement:
"Sprint has been a vital source of economic development and jobs in the Kansas City area for many years, and I urge the new company's leadership from the recently announced merger with T-Mobile to continue growing and innovating in Kansas. As the Chairman of the Commerce Subcommittee with jurisdiction over the welfare of consumers, including enforcement of certain mergers and acquisitions, I plan to closely monitor developments beyond this announcement. As the nation seeks to continue its mission of closing the Digital Divide by bringing high-speed broadband access to rural America, I look forward to seeing Kansas maintain its leadership role as a telecommunications and technology destination for industry and workforce."
Sprint has a lot of debt and has posted a string of annual losses. The company has cut costs and made itself more attractive to customers, BTIG Research analyst Walter Piecyk says, but it hasn't invested enough in its network and doesn't have enough airwave rights for quality service in rural areas.
T-Mobile, meanwhile, has been on a yearslong streak of adding customers. After the government nixed AT&T's attempt to buy the company in 2011, T-Mobile led the way in many consumer-friendly changes, such as ditching two-year contracts and bringing back unlimited data plans. Consumers are paying less for cellphone service, thanks to T-Mobile's influence on the industry and the resultant price wars.
"T-Mobile does not need a merger with Sprint to succeed, but Sprint might need one to survive," Piecyk wrote in a research note.
Sprint and T-Mobile's announcement is just the latest step in an ongoing movement towards telecom consolidation. AT&T is in talks to acquire Time Warner, which owns CNN and CNNMoney. The outcome of that $85 billion merger-in-the-making depends on a case in federal court, which is pending the decision of the judge.
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