T-Mobile and Sprint agreed to merge to accelerate 5G innovation

[Brink]

Mobile US (NASDAQ: TMUS) and Sprint Corporation (NYSE: S) today announced they have entered into a definitive agreement to merge in an all-stock transaction at a fixed exchange ratio of 0.10256 T-Mobile shares for each Sprint share or the equivalent of 9.75 Sprint shares for each T-Mobile US share. Based on closing share prices on April 27, this represents a total implied enterprise value of approximately $59 billion for Sprint and approximately $146 billion for the combined company. The new company will have a strong closing balance sheet and a fully funded business plan with a strong foundation of secured investment grade debt at close.

The combined company will be named T-Mobile, and it will be a force for positive change in the U.S. wireless, video, and broadband industries. The combination of spectrum holdings, resulting network scale, and expected run rate cost synergies of $6+ billion, representing a net present value (NPV) of $43+ billion will supercharge T-Mobile’s Un-carrier strategy to disrupt the marketplace and lay the foundation for U.S. companies and innovators to lead in the 5G era...

Read more: T-MOBILE AND SPRINT TO COMBINE, ACCELERATING 5G INNOVATION & INCREASING COMPETITION | T-Mobile Newsroom

 

[mrjimphelps]

If T-Mobile is the senior partner here, then this might be a good thing for both companies. But if Sprint is the senior partner, I'm not optimistic about this merger. Years ago, Sprint bought Nextel. Sprint missed a huge opportunity to capitalize on the popularity of Nextel for their push-to-talk technology. Sprint should have redone all of their phones to have Sprint phone and Nextel push-to-talk on every phone. If they had done this, they would have gained a lot of market share. Instead, they totally ignored this type of innovation and missed out on a big jump in the number of customers that Sprint would have had.

Sprint had a much better phone network than Nextel; and Nextel had a much better push-to-talk offering than anyone. Both of those on a single phone would have given Sprint a huge advantage over all other cellular companies.

I think Sprint is content to be a middle-tier company. Either that, or they just don't have the energy to exploit their advantages.