T-Mobile to Buy Sprint for $26.5B to Create US 5G Powerhouse

Dan Jones
4/30/2018
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T-Mobile and Sprint finally came together Sunday to announce a $26.5 billion merger that company executives repeatedly claimed will create American jobs, increase broadband competition and cement the US as the leader in 5G.

John Legere, the boisterous CEO of T-Mobile US Inc. , will serve as the "new" T-Mobile leader. Sprint Corp. (NYSE: S) CEO Marcelo Claure will get a seat on the board. The new T-Mobile will be headquartered in Bellevue, Wash., with a second headquarters in Overland Park, Kan. The companies hope to close the deal no later than the first half of 2019.

The combined company would be the third-largest wireless operator in the US, behind AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ)

On a press and analyst call Sunday afternoon, Legere said that the merger is "happening for one reason, customers expect -- no demand -- innovation." He promised that customers will get a better network and lower prices out of the merger.

Perhaps with an eye toward US regulatory concerns, however, Legere stressed that the deal would create "thousands of American jobs." He praised the Trump administration's tax reform for helping to facilitate the deal and noted that the deal would help the US grab the lead in 5G while bringing broadband to rural communities across the country.

This merger, he argued later in the call, will help cement "America's rightful spot in the 5G evolution cycle," an important point given White House concern about China taking the lead in 5G, and the fact that the Trump administration cited that specific fear as one reason for blocking Broadcom from buying Qualcomm. (See Trump on 5G: It's a 'Gamechanger' and Trump Blocks Broadcom's Qualcomm Acquisition .)


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Combining the two networks will be a mammoth task, which the companies expect will take three years. The combined company will start with 110,000 cell towers and hope to end up with around 85,000 macro sites, with radios supporting both Sprint and T-Mobile frequencies. They jointly have less than 10,000 small cells now and expect to grow that to 50,000 over the three years from the anticipated close in 2019.

If approved, the deal would give the company a swathe of mid- and low-band spectrum for deploying 5G nationwide, as well as Sprint's 2.5GHz band in the US.

"Our millimeter wave holdings ... are 200MHz across a million PoPs," T-Mobile CTO Neville Ray said on the call, while adding that it would cost "$1.5 trillion" for the current big two operators to build out millimeter wave nationwide across the country because of the limited coverage range the technology provides. (See 5G & Millimeter Wave Band Challenges.)

"Never gonna happen," he declared.

"There's a lot of radio work that needs to happen to support the eventual migration path," Ray said. "But we're very confident we can break the back of it within three years, if not before."

The executives are pinning a lot of hope on a friendly regulatory environment that doesn't ask for spectrum -- or other concessions -- to approve the merger. "We need every ounce of spectrum," Ray said.

The goal is to deliver a nationwide mobile 5G network that provides an average speed of 450 Mbit/s over the air everywhere, "not just peak speeds," Legere said. The companies argue that will allow them to deliver broadband -- including TV -- anywhere, and take on the cable companies, not just its wireless competitors.

"We will bring all the latest technologies ... to the rural communities of America," Marcelo Claure claimed.

"T-Mobile cannot do the 5G strategy without Sprint, and Sprint cannot do it without T-Mobile," Claure said.

This is just the latest attempt by the two companies to merge: Talks most recently fell apart in November 2017.

"This has been Masa's plan since 2012," Claure said, referring to Softbank's CEO Masayoshi Son. "Last year, we never had a deal, we could never come to an agreement." (See Sprint, T-Mobile Merger Falls Apart (Again!).)

If the deal closes, Germany's Deutsche Telekom AG (NYSE: DT) will hold a 42% stake in the combined company, Japan's SoftBank Corp. a 27% stake, and the rest will be publicly held, Legere said.

— Dan Jones, Mobile Editor, Light Reading

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DanJones
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DanJones,
User Rank: Blogger
5/2/2018 | 4:50:16 PM
Re: INTERESTING
10-Mbit/s IS way more than a lot of people get on their smartphones right now, particularly outside of the cities in the US. Take a drive between Nashville and New Orleans sometime!
brooks7
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brooks7,
User Rank: Light Sabre
5/2/2018 | 4:37:32 PM
Re: INTERESTING
I think this notion that the real world gets 10Mb/s mobile connection speed is really cute.

seven

 
TV Monitor
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TV Monitor,
User Rank: Light Sabre
5/2/2018 | 12:38:34 PM
Re: INTERESTING
@DanJones

Saying 450 mbits/s is enough is like Bill Gates saying 640 KB is enough for PC.

Heck, there were one time when people thought 10 mbits/s sustained connection speed on mobile was good enough. Those days are long gone.
DanJones
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DanJones,
User Rank: Blogger
5/2/2018 | 12:08:24 PM
Re: INTERESTING
Yeah, for dense urban areas. Not even Verizon is saying more than that right now. Cool for me, I live in NYC, ain't gonna work so good for Mammoth, Arizona.
TV Monitor
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TV Monitor,
User Rank: Light Sabre
5/1/2018 | 11:20:38 AM
Re: INTERESTING
@Dan Jones

so a moot point at this point.

At some point, the low-band 5G runs out of steam and can't grow in capacity.

Think of the LTE, which started at 20 Mbits/s but is now hitting 1 Gbits/s.

The 3.5 Ghz low-band 5G may have already hit the capacity wall. The only way to hit 20 Gbits/s as promised is to go mmwave 5G.
DanJones
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DanJones,
User Rank: Blogger
5/1/2018 | 10:13:15 AM
Re: INTERESTING
Kinda so what, right now?

 

Sprint & T-Mobile don't have have the 28GHz footprint to do nationwide mmWave, even if they wanted to, so a moot point at this point.
TV Monitor
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TV Monitor,
User Rank: Light Sabre
4/30/2018 | 5:29:40 PM
Re: INTERESTING
@DanJones

"Sprint has Samsung as a 5G supplier though, right?"

Yes, but Samsung's range advantage in 3.5 Ghz band is not as absolute as its range advantage in 28 Ghz.

@Clifton K Morris

"I'd say the $Trillions needed to deploy 5G LTE on that band are relatively accurate"

IF a carrier is using Nokia mmwave equipment, then number maybe accurate.
If a carrier is using Samsung mmwave equipment, then the number is 2~3X over LTE.

It may be worthwhile starting a series of LTE Co-Ops or franchises across the country that run on Baicells Equipment

In current US-China trade war climate, I don't think so.
DanJones
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DanJones,
User Rank: Blogger
4/30/2018 | 5:11:44 PM
Re: INTERESTING
They still need the CBRS auction approved for their tech to pop in the US though. We should know within a couple of months either way.
Clifton K Morris
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Clifton K Morris,
User Rank: Lightning
4/30/2018 | 5:01:23 PM
Re: INTERESTING
Good point, TV Monitor. This is one of the reasons why Baicells is still a very viable competitor. It was started by chief LTE engineers who gave up sizeable retirement packages from Huawei, and then More Huawei engineers left the company to assist Baicells. Huawei sees them as such a threat that Huawei recently decided to build an office across the street from Baicells.

But unlike Huawei, Baicells licenses IP and patents from Intel and Qualcomm.

It may be worthwhile starting a series of LTE Co-Ops or franchises across the country that run on Baicells Equipment. see: https://na.baicells.com
Clifton K Morris
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Clifton K Morris,
User Rank: Lightning
4/30/2018 | 4:54:36 PM
Re: INTERESTING
True, but considering the bio of Karri Kuoppamaki at T-Mobile (a former head of Nokia Siemens Networks) I’d say the $Trillions needed to deploy 5G LTE on that band are relatively accurate.

200 million AT&T and Verizon customers are likely thrilled about the upcoming price increase which undoubtedly will be passed to customers.
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