Published on : Apr 30, 2018
Consolidation forces in the telecommunication industry bring into their fold many an exciting avenues, not to speak of wiping off some potential competitors from the developed markets. These forces are led by corporate mergers and the players entering into the deals reiterate about several upsides that may attract shareholders and customers. T-Mobile US, Inc. (T-Mobile) and Sprint Corporation (Sprint) announced on April 29, 2018 that they have entered into a $26 billion all-stock merger deal. The companies are optimistic that the deal will be finalized by Q2 of next year. They would succeed in passing over all stringent regulations likely to put forth U.S. antitrust regulators, who will be evaluating the deal. The combined entity as a result between the third and fourth wireless network operators will be called T-Mobile and is poised to challenge the prominence of U.S. stalwarts AT&T and Verizon Wireless.
After Two Failed Negotiation Deal Expected to go through by mid-2019
After years of intense negotiations punctuated by two rounds of failed merger talks, the new CEO of the combined company is optimistic of the deal going through. The second round of talks between them has failed in November last year. The high hope this time is underpinned by the fact that the merger deal will in all likelihood lead to the several benefits: more jobs creation, better wireless services in rural areas, and the building up of high-capacity U.S. network.
T-Mobile, headquartered in Bellevue, Washington, is valued at $54.7 Bn, vis-à-vis market capitalization, while Sprint’s valuation is pegged at $26 Bn. The all-stock transaction is pegged at a set exchange ratio of 0.10256 shares of T-Mobile for each the other U.S. company’s share.
Consolidation Deal likely to Create of High-Capacity Wireless Network and 5G paving way for More Jobs
The nationwide connectivity will also help in advancing 5G wireless connectivity across the states. To this end, T-Mobile has committed investing around US$ 40 billion in the next three years and the new CEO believes that the network will provide a robust framework for the rapid development of drone technologies and self-driving cars.
Of note, Deutsche Telekom AG, the majority owner of T-Mobile and Japan-based SoftBank Group Corp, which has a majority stake in Sprint, has agreed on a framework that will enable them in further consolidation.