The recent whispers about T-Mobile US, Sprint and their merging are beginning to get much louder as the carriers could announce it’s a done deal by the end of the month, writes RCR Wireless News’ Martha DeGrasse.
Speculation that the deal may be finalized soon comes from the carriers’ upcoming earnings release schedules being so close together. T-Mobile will report earnings on October 23 and Sprint will do the same the day after. Companies often pair their merger announcements with their earnings releases.
Before the releases, the carriers and their agents are reportedly doing due diligence on Sprint’s business.
Although the merger is expected to be done at the end of the month, there are still a number of details that need to be ironed out before it’s officially complete. Both sides have yet to agree on a price. Reportedly, their merger would be an all-stock deal, with T-Mobile most likely distributing stock in the newly formed company to Sprint shareholders, including its biggest, SoftBank.
The carriers will have to mutually determine an exchange rate that dictates how many Sprint shares each T-Mobile US share will be worth at closing. The process could get complicated as both company’s share prices fluctuate every day.
Another potential hiccup stems from leadership struggles. John Legere is the chief executive officer of T-Mobile and under his guidance, the carrier created a successful anti-establishment marketing campaign and took over Sprint’s spot as the number three mobile network operator in terms of subscribers in the United States.
Meanwhile, SoftBank chairman Masayoshi Son picked Sprint CEO Marcel Claure, who is also the founder of Brightstar, a mobile device logistics provider and a 2014 SoftBank acquisition. SoftBank plans to be hands-on with the merged company in the event the deal goes through. There will also be the issue of where the company would put its corporate headquarters; T-Mobile is in Seattle while Sprint operates out of Kansas City.
Once all of those issues are resolved, the carriers will have to get approval from the U.S. Justice Department. During the Obama Administration, the Justice Department was not likely to approve AT&T’s planned acquisition of T-Mobile US, with a new administration in place, it could be different this time.
A recent Federal Communications Commission (FCC) report stated the U.S. mobile market is currently competitive; the report estimated that almost 97% of the U.S. population had access to LTE service from three or more wireless carriers at the end of last year. If Sprint and T-Mobile US merge, it could put a pin in the constant pricing competition and unlimited data offerings U.S. consumers have benefited from.
A unified T-Mobile US-Sprint entity could outpace both Verizon and AT&T in both coverage and network quality, while also not having a much of a need for promotions to get new business. Plus, if customers increase how much they’ll pay for wireless service, that means more revenue for the carriers, which can be invested in 5G technologies as they’re rolled out.