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5G

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

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 4/29/2018 | 7:23:44 PM
3 years Think they can do it?
Joe Stanganelli 4/29/2018 | 11:02:57 PM
T+S My question is: Will T-Mobile indeed lift Sprint up while being boosted in and of itself? Or will Sprint drag T-Mobile down?

I suspect the former, particularly given that Legere's remaining at the helm... especially given that this purchase seems far less about Sprint's innovation and far more about their network presence.
DanJones 4/30/2018 | 12:35:15 AM
Re: T+S Impossible to say at this junction...
James_B_Crawshaw 4/30/2018 | 3:58:54 AM
Re: T+S "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact." - Warren Buffett
Joe Stanganelli 4/30/2018 | 10:33:44 AM
Re: T+S "The problem with quotes on the Internet is that it is hard to verify their authenticity."

- Abraham Lincoln

;)
brooks7 4/30/2018 | 11:52:02 AM
Re: T+S That was not Lincoln who said that...it was Douglas.

seven

 
TV Monitor 4/30/2018 | 12:24:19 PM
Re: 3 years @DanJones

"Think they can do it?"

I don't think so. CDMA and GSM don't play nicely.
Clifton K Morris 4/30/2018 | 2:41:16 PM
INTERESTING I don’t know, I watched the marketing video featuring John Legere with utter surprise today. First, he said that AT&T and Verizon would have to pay over $1.5 trillion to compete with the combined network of T-Mobile and Sprint.

But remember, it’s not just Sprint and T-Mobile it’s actually combination of multiple networks originally founded in funding to provide local service including rural service.

Sprint also owns the assets and networks of clear wire and Nextel. The Nextel merger was very interesting because if memory serves me correctly it was nearly double the amount T-Mobile is paying for sprint.

In any situation, This transaction completely rewrite the entire industry itself as far as spectrum asset valuations are concerned. So, that actually makes cable company is really smart because they will should be able to get future spectrum and a bare-bones price. In addition to that, I see some serious issues with competition not only with AT&T and Verizon, but also with other companies. The combined net worth of sprints, Clearwater, Nextel, T-Mobile, Verizon’s divestiture of Band 12 and other networks Have a once-in-a-lifetime unique opportunity to file complaints with the DOJ and FCC for competitiveness. Additionally, and in the past foreign companies were only allowed to bid on very small amounts of spectrum; this was to provide incentive to favor US-based companies who use Us-based technology. Today, WiMAX (funded by Intel, Comcast, ClearWire, Sprint) and CDMA (Lucent; now a part of Nokia) isn’t actively installed anymore. European and Chinese LTE is favored. So there are a several Material issues with what was shared in the video press release over the weeked, And how it’s supposed to be beneficial to US technology. The Company will also be majority foreign-owned.

In all, it shows how Wallstreet investors in Silicon Valley and Companies like Facebook are not darlings of wallstreet. The sheer ridiculousness of valuations in who lack ownership of infrastructure is detrimental to the US Economy. Verizon and AT&T will now have to raise $1.5 Trillion to compete.
DanJones 4/30/2018 | 3:26:01 PM
Re: INTERESTING The $1.5 trillion stat refers to how much they *think* AT&T and Verizon would have to pay to deploy millimeter wave 5G across the US. They refernced it on the call.
TV Monitor 4/30/2018 | 3:54:44 PM
Re: INTERESTING @DanJones

"The $1.5 trillion stat refers to how much they *think* AT&T and Verizon would have to pay to deploy millimeter wave 5G across the US. They refernced it on the call."

That's what happens when one uses short-rage(900 feet) Nokia mmwave 5G basestations to build out a nationwide mmwave 5G network.

When one uses Samsung's mmwave 5G basestations, the number drops to 2~3 times the cost of a nationwide LTE build out due to Samsung 5G's 2000 feet cell radius(source Verizon).

There is only one vendor to go to if one wants to deploy mmwave 5G; Samsung.

But this means T-Mobile will be de-emphasizing mmwave 5G and focus on Sprint's 2.5 Ghz low-band 5G instead. Here, at least there are multiple vendors, even if Sprint's launch 5G vendor was Samsung. 
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