The two smallest of the big four telecommunications giants in the United States are set to merge in a $32 billion deal that could create a more competitive marketplace for consumers. Sprint and T-Mobile have reportedly agreed to a tie-up that could be announced as soon as July.
Under terms of the reported deal, Sprint would purchase T-Mobile for $40 a share, or about $32 billion. That price represents a 17 percent premium on T-Mobile's mid-week stock price.
AT&T tried to buy T-Mobile three years ago but that deal was struck down by antitrust regulators. But with the nation's top two wireless carriers, Verizon and AT&T Wireless, only tightening their respective grips on the market, the creation of a third, more powerful carrier would likely be welcomed, not resisted, this year.
And both Verizon and AT&T have been involved in their own mega-deals in recent months. Verizon purchased the remainder of Verizon Wireless from Vodafone for $130 billion in 2013. And AT&T just agreed to purchased DirecTV for $49 billion, though that latter deal has yet to clear regulatory hurdles.
A combined Sprint/T-Mobile would have about 100 million subscribers, giving the firm a better chance to compete against its bigger rivals. Both Verizon and AT&T also have over 100 million wireless subscribers, though those firms, unlike Sprint and T-Mobile, also have assets in other related markets such as cable TV and home broadband access.
The majority of T-Mobile is owned by Germany-based Deutsche Telekom, which has been trying to shed the firm for years. But given what happened with AT&T three years ago, the proposed Sprint/T-Mobile merger comes with a reported $1+ billion breakup fee that Sprint would pay T-Mobile if the deal is not finalized.
I propose the name SprinT-Mobile.
