Light Reading

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
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?
SReedy
50%
50%
SReedy,
User Rank: Blogger
6/5/2014 | 5:25:38 PM
$$$
What do we think of the price point? Just below $39 billion AT&T offered for T-Mobile, but that makes sense given there relative sizes. Still a huge deal!
SReedy
50%
50%
SReedy,
User Rank: Blogger
6/5/2014 | 5:24:31 PM
T-Mobile robots
Well we all knew this was coming, although the timing was up in the air with reports of them waiting for the auctions to be over. I guess they're feeling confident enough now. The mega cable deals are probably part of the reason why too, although nothing is finalized yet.

I think it was the timing of anouncing this with his robots, but I get the feeling Softbank/Son is taking over the world!
SReedy
50%
50%
SReedy,
User Rank: Blogger
6/5/2014 | 5:22:34 PM
Re: Mobile in the Hills
Sprint's deal with the CCA will help with that more than anything. I'm assuming that will still go through. I bet T-Mobile will join in too, which is even better news for rural America.
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...

 
Flash Poll
From The Founder
The New IP is actually bigger even than business. Like another hugely important tech that Light Reading is digging into right now, the New IP has the potential to change the world by fundamentally advancing what it is possible for people to achieve with communications.
LRTV Huawei Video Resource Center
Huawei Shares Its Vision of the Future of Mobile Networks Innovations

2|26|15   |   2:30   |   (0) comments


Mobile broadband is changing our lives. It's reshaping the Internet, industry, and society. It allows us to freely connect with one another anytime, anywhere. At this year's Mobile World Congress, Huawei will share its latest insights and newest ideas and technologies that will shape the future of MBB. They will showcase their end-to-end MBB solutions that will ...
LRTV Huawei Video Resource Center
Accelerate Digitizing, Boost Digital Business

2|26|15   |   6:14   |   (0) comments


A new digital revolution is leading us to a better connected world. Together with millions of digital partners, Huawei will help CSPs to build their digital service ecosystem and aggregate a wide variety of digital services. In this video, we find out how Huawei is going to help CSPs implement digital operations.
LRTV Huawei Video Resource Center
The Secret Recipe to Enabling Hyper-Growth Industries

2|26|15   |   3:38   |   (0) comments


With a number of successful cases on network capability exposure, Huawei is going to share the secret recipe to enabling hyper-growth markets with a step-by-step approach.
LRTV Documentaries
BTE 2015 Is Bigger & Even Better

2|25|15   |   03:13   |   (4) comments


This year's Big Telecom Event (BTE) in Chicago is going to provide more opportunities than ever for networking, getting to grips with key industry challenges and opportunities and, equally as important, having some fun.
LRTV Interviews
Light Reading ICT Leaders Roundtable at MWC 2015

2|12|15   |   1:07   |   (2) comments


On Sunday March 1, 2015, Light Reading will host an ICT Leaders Roundtable in partnership with Huawei. At this half-day event, CIOs, analysts and researchers will discuss key industry trends like virtualization in the cloud with a specific focus on new business models. Located at the luxurious Renaissance Hotel near the Fira Barcelona, space is limited so please ...
LRTV Documentaries
Going Green in 2015

2|12|15   |   02:04   |   (0) comments


Energy efficiency is set to be an incredibly hot topic in the telecom industry this year.
LRTV Custom TV
SDN & NFV: Where Are We Going From Here?

2|11|15   |   11:27   |   (0) comments


Vitesse Semiconductor CTO Martin Nuss gives his perspective on why SDN and NFV should be tightly interconnected and how he sees the industry moving forward.
LRTV Documentaries
Time for Gigabit Europe?

2|9|15   |   01:27   |   (4) comments


Gigabit broadband networks are springing up all around the US and they'll soon become more commonplace in Europe.
LRTV Interviews
Brocade Brings New IP Vision to 2020 Vision Executive Summit

2|3|15   |   4:23   |   (0) comments


In December 2014, Light Reading gathered telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Brocade's Kelly Herrell shared his company's strategy at ...
LRTV Interviews
Brocade's Kelly Herrell on the New IP

2|2|15   |   12:36   |   (0) comments


In December 2014, Steve Saunders sat down with Brocade VP of Software Networking Kelly Herrell at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Brocade's approach to the New IP, the future of the telecom industry, and more.
LRTV Huawei Video Resource Center
Dr. Dong Sun Talks About Carriers' Digital Transformation & Huawei’s Telco OS

1|29|15   |   6:28   |   (0) comments


Dr. Dong Sun, Chief Architect of Digital Transformation Solutions at Huawei, discusses how telecom operators can become digital ecosystem enablers and deliver optimal user experiences that are in real-time, on-demand, all-online, DIY and social (ROADS).
LRTV Huawei Video Resource Center
Huawei's Chief Network Architect Talks about Network Experience & Operators’ Strategies

1|29|15   |   3:39   |   (0) comments


In the digital age, network experience has become the primary productivity especially for telecom operators. In this video, Wenshuan Dang, Huawei’s Chief Network Architect, discusses how carriers can tackle the challenge of infrastructure complexity in order to enhance business agility and improve user experience.
Upcoming Live Events
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
All Upcoming Live Events
Infographics
Net neutrality, broadband services and the current outlook on data consumption, as presented by the New Jersey Institute of Technology.
Hot Topics
Cyber Security Expert Warns: You're Doing It Wrong
Sarah Thomas, Editorial Operations Director, 2/23/2015
10 Weirdly Useful IoT Devices
Eryn Leavens, Copy Desk Editor, 2/24/2015
Small Cells Enabling Location Services
Sarah Thomas, Editorial Operations Director, 2/25/2015
MWC: Let the Madness Begin
Ray Le Maistre, Editor-in-chief, 2/23/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Check out Light Reading's interview with Jay Samit, the newly appointed CEO of publicly traded SeaChange International Inc. With a resume that includes Sony, EMI, and Universal, Samit brings a reputation as an entrepreneur and a disruptor to his new role at the video solutions company. Hear what he had to say about the opportunities in video, as well as the outlook for cable, telco, OTT and mobile service providers.
G'day! And welcome to an entirely new feature on Light Reading -- our weekly "CEO-to-CEO" interview.