& cplSiteName &

Sprint, T-Mobile Settle on $32B Price

Alan Breznick
6/5/2014
50%
50%

Sprint and T-Mobile have worked out the broad terms of a $32 billion merger that would potentially turn the combined company into a much more powerful competitor in the huge US wireless market.

The deal worked out by negotiators calls for Sprint Corp. (NYSE: S) to pay about $40 a share for T-Mobile US Inc. in a stock-and-cash arrangement, according to multiple news reports Thursday morning. That represents about a 17% premium over T-Mobile's closing stock on price on Wednesday. Neither of the companies were commenting on the reports this morning.

Even with the price apparently settled, though, the two companies must still hammer out a formal merger contract over the next few days or weeks. So the deal could still fall through if other terms can't be worked out.

If the deal is consummated, it would bring together the third- and fourth-biggest wireless carriers in the US, thus creating a much larger rival to the dominant duo of AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). SoftBank Corp. Chairman Masayoshi Son, whose company owns Sprint, has long argued that such a merger is necessary to create a national carrier with the resources to upgrade its network and compete against AT&T and Sprint. (See SoftBank Could Consider Euro Acquistions,)

But, by narrowing the wireless field in the US from four to three major carriers, the proposed deal would raise strong regulatory concerns in Washington, D.C. Both the Antitrust Division of the U.S. Department of Justice and the Federal Communications Commission (FCC) have already signaled that they favor four strong players in the market, not three, and regulators stepped in to block AT&T's proposed $39 billion bid for T-Mobile just three years ago.

Despite such concerns, the news reports say, both companies think their timing may be better now because of new developments at the FCC, including the latest stormy debate over net neutrality rules and new spectrum auction rules that appear to favor AT&T and Verizon over the smaller carriers. They are also hoping that the recent wave of proposed big US media mergers, including AT&T's $49 billion deal to buy DirecTV Group Inc. (NYSE: DTV) and Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s $45 billion agreement to purchase Time Warner Cable Inc. (NYSE: TWC), may have shifted the regulatory landscape.

Under the proposed deal, Deutsche Telekom AG (NYSE: DT), the majority owner of T-Mobile with a 67% stake, would continue to hold a 15% to 20% stake in the new combined company, according to the reports. That would free up the German carrier to concentrate on its European markets.

We'll have much more to say on this proposed merger as more details unfold. What had already promised to be a busy summer has just gotten even busier.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(8)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
KBode
50%
50%
KBode,
User Rank: Light Sabre
6/6/2014 | 11:34:47 AM
Re: Competition
"Could AT&T have been agressive in their pricing in response to T-Mobile as a way to prevent Sprint buying T-Mobile long before it was even announced?  Where has Verizon and Sprint been in the price drops?"

I actually  think AT&T's reactions are mostly cosmetic, with the lion's share of price cuts being only modest cuts to 10 GB plans and higher. Sprint has responded somewhat with their "Framily" plans, but Verizon continues to believe they're network is SO GOOD they simply don't have to compete on price.
mjgraves
50%
50%
mjgraves,
User Rank: Lightning
6/6/2014 | 11:31:08 AM
Re: Mobile in the Hills
As a long time T-Mobile customer I can tell you...good luck with that! T-Mobile's coverage is typically thought to be the worst of all four. In the cities and suburbs they are ok.

In rural areas they drop back to 2G in may places.
lanbrown
50%
50%
lanbrown,
User Rank: Light Sabre
6/5/2014 | 10:54:01 PM
Competition
"Sprint said the deal would severely reduce competition in the United States cell phone industry."

So, if going from four to three would reduce competition in 2011, then going from four to three in 2014 will be no different.  I think the words from Sprint in 2011 should be used against them today.  Imagine the irony in that.

 

One hurdle, Sprint hates to open their network to BYOD in terms of the consumer whereas T-Mobile welcomes them with open arms.  Sprint is bad for the consumer; having them buy a pro-consumer company will not help competition but kill it.  Verizon is not too friendly with BYOD either.  AT&T at least tolerates it.

 

Could AT&T have been agressive in their pricing in response to T-Mobile as a way to prevent Sprint buying T-Mobile long before it was even announced?  Where has Verizon and Sprint been in the price drops?
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
6/5/2014 | 3:19:55 PM
Re: Mobile in the Hills
I live within city limits but can't get a Tmobile signal if I am inside my home (it fine if I step outside)--a neighbor says she has the same problem with Verizon.
jabailo
0%
100%
jabailo,
User Rank: Light Sabre
6/5/2014 | 12:40:49 PM
Mobile in the Hills
As a long time Virgin Mobile (which leases the Sprint network) customer, I hope this expands Sprint's coverage to beyond the Metro areas, like many other carriers.  The signals tend to drop or get lost in the far reaches of the suburbs and certainly in rural areas.

And I still wonder where Sprint is going with wireless broadband.  Is it only for mobile and short use (LTE data caps) or will they continue the Clear model of always on, unlimited data home use...

 
Featured Video
From The Founder
Light Reading founder Steve Saunders grills Cisco's Roland Acra on how he's bringing automation to life inside the data center.
Flash Poll
Upcoming Live Events
March 20-22, 2018, Denver Marriott Tech Center
March 22, 2018, Denver, Colorado | Denver Marriott Tech Center
March 28, 2018, Kansas City Convention Center
April 4, 2018, The Westin Dallas Downtown, Dallas
April 9, 2018, Las Vegas Convention Center
May 14-16, 2018, Austin Convention Center
September 25-27, 2018, Denver, Colorado
October 2, 2018, The Westin Times Square, New York
October 22, 2018, Georgia World Congress Centre, Atlanta, GA
November 8, 2018, The Montcalm by Marble Arch, London
November 29, 2018, The Westin Times Square, New York
December 4-6, 2018, Lisbon, Portugal
All Upcoming Live Events
Hot Topics
Sprint Says No to mmWave, Yes to Mobile 5G
Dan Jones, Mobile Editor, 1/11/2018
Altice USA Embraces Home-Alone Strategy
Alan Breznick, Cable/Video Practice Leader, Light Reading, 1/11/2018
Trump Says Foxconn Will Make iPhones in US
Dan Jones, Mobile Editor, 1/15/2018
Huawei, ZTE Face US Federal Ban
Iain Morris, News Editor, 1/15/2018
Analyst: Verizon's Fixed 5G Is a Loss Leader for Mobile
Dan Jones, Mobile Editor, 1/16/2018
Animals with Phones
Live Digital Audio

A CSP's digital transformation involves so much more than technology. Crucial – and often most challenging – is the cultural transformation that goes along with it. As Sigma's Chief Technology Officer, Catherine Michel has extensive experience with technology as she leads the company's entire product portfolio and strategy. But she's also no stranger to merging technology and culture, having taken a company — Tribold — from inception to acquisition (by Sigma in 2013), and she continues to advise service providers on how to drive their own transformations. This impressive female leader and vocal advocate for other women in the industry will join Women in Comms for a live radio show to discuss all things digital transformation, including the cultural transformation that goes along with it.

Like Us on Facebook
Twitter Feed