T-Mobile and Sprint, the third and fourth largest wireless phone networks in the United States have joined forces. Both companies have been consolidating a merger for a number of years. However, it was frequently put off as both Sprint and T-Mobile were preoccupied with other deals. They were also dealing with heavy scrutiny from regulators.
After so much time, the two companies have finally settled on a $32 billion deal set to be announced in the coming months. This information came from people briefed on the situation this Wednesday. Under this deal which is still in it’s preliminary stage, Sprint would acquire T-Mobile for approximately $40 a share in both stock and cash. This is a 17 percent premium to Wednesday’s price.
With all of this said, the deal is still in it’s early stages. The entire merger could still crumble. However, the fact that talks are currently underway definitely marks a turning point in the relationship between these two mobile giants, especially considering how long this deal was been in talks.
It’s very apparent that this merger was a decision made in result to the growing success of other mobile networks. Both Verizon and AT&T have now surpassed $100 million subscribers. They are experiencing continued growth and very much dominate the market. It seems smart for T-Mobile and Sprint to combine so they can compete against Verizon and AT&T.
Both AT&T and Verizon have been making multiple deals, expanding their networks. AT&T recently agreed to acquire DirecTV for $49 billion. This deal gives them control of the largest satellite television provider in the US.
Verizon, being the largest of the four companies, have also been making multiple deals. The company agreed to take full control of Verizon Wireless in a $130 billion deal with Vodafone just last year. The company’s sheer size is quite staggering as the company also provides landlines, cable television and other business services.
Considering the size of AT&T and Verizon, this merger makes a great deal of sense. With the other companies expanding and making more deals to broaden their networks, the mobile landscape has become increasingly marginalized. Sprint and T-Mobile don’t have the financial resources needed to compete against AT&T and Verizon on their own. They also don’t have the same number of other services to offer customers.
If this deal does come to fruition, it will likely face heavy regulatory scrutiny. Antitrust officials at the Justice Department are currently examining the potential implications of the Comcast acquisition of Time Warner Cable as well as the previously mentioned deal between AT&T and DirecTV. Regulators need a massive amount of foresight when examining these deals, which can take a great deal of tome.