T-Mobile Buys Sprint In £19bn Mega-Deal

US telecoms company T-Mobile is to acquire rival Sprint in a $26bn (£18.9bn) deal that would reduce the number of nationwide wireless carriers in the country from four to three.

The merger, which almost took place in 2014 and again in October, is likely to face significant regulatory scrutiny over concerns it would reduce competition, meaning higher prices for consumers.

Deutsche Telekom, which owns T-Mobile, has been negotiating with Japan’s SoftBank, which controls Sprint, over a merger for years.

The all-stock deal will see Deutsche Telekom own 42 percent of the combined company, with SoftBank holding 27 percent.

Consolidation

The combined firm, which will take the T-Mobile name, would be valued at $146bn and have more than 127 million wireless subscribers, bringing it a closer to the biggest US carriers, Verizon and AT&T.

The merger would permit the companies to save money by closing branches and merging networks, providing more funds to invest in infrastructure and 5G development.

T-Mobile chief John Legere, who is to head the new firm, said the deal would allow the combined company to invest more in 5G development, expand its network and create tens of thousands of jobs in the rural US.

“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.

He said companies such as Comcast and Charter Communications, both US cable providers with deals allowing them to sell consumer services on Verizon’s network, are bringing more competition to the wireless market.

“There are now at least seven or eight big competitors in this converging market,” Legere said.

The Communications Workers of America union disagreed, saying the merger would cost at least 20,000 US jobs, reduce competition and raise prices.

The Justice Department and the Federal Communications Commission (FCC) regulator must both approve the deal for it to take place.

Competition fears

Last year the US administration blocked AT&T from taking over Time Warner, arguing it would reduce choice for consumers, and in March it blocked Broadcom’s record-setting bid for Qualcomm on national security grounds.

But in September of last year the FCC said the wireless market was “competitive” for the first time since 2009. FCC chair Ajit Pai, a Trump appointee, has not criticised the idea of three national carriers, as did the previous Obama-era chair.

Competition concerns have also been raised by telecoms companies moves to buy internet and media companies, with AT&T buying DirecTV and attempting to acquire Time Warner, and Verizon’s purchase of Yahoo and AOL.

Verizon’s Oath brand, which includes both Yahoo and AOL, also owns a number of internet media firms.

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Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

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