T-Mobile and Sprint finally agreed to a massive telecom merger after years of negotiations punctuated by two breakups.
The move combines the third and fourth largest service provides in the nation. Sprint was valued at $26 billion based on its last closing price, and T-Mobile was last valued at $55 billion. The deal gives the combined company, which will take on the name T-Mobile, a "total implied enterprise value" of $146 billion, according to a press release.
Executives are promising to hire thousands of people in a bid to create a nationwide 5G network.
T-Mobile CEO John Legere told reporters on a conference call Sunday that the company plans to deliver "the highest capacity network in US history."
The tie-up would position the telecom companies as fiercer competitors to Verizon and AT&T, which have long dominated the US market.
"I’m excited to announce that @TMobile & @Sprint have reached an agreement to come together to form a new company — a larger, stronger competitor that will be a force for positive change for all US consumers and businesses! Watch this & click through for details." Legere said in a tweet Sunday.
A report that the deal was getting close drove up Sprint’s stock price by 8% on Friday and T-Mobile’s price edged up as well. The stock price for SoftBank, a Japanese conglomerate with a majority stake in Sprint, rose by 3%.
Sprint and T-Mobile first discussed a merger in 2014 but scrapped it because of concerns about regulatory challenges from the Obama administration.
The companies expected to have a better shot at the merger under the Trump administration.
SoftBank CEO Masayoshi Son met with Trump the month before he took office to talk up an investment in US businesses.
A few weeks later, T-Mobile’s Legere said he was open to "various forms of consolidation" when asked about a potential merger with Sprint and SoftBank under the Trump administration.
But last November, after much speculation, the two companies issued a statement saying they "have ceased talks."
"While we couldn’t reach an agreement to combine our companies, we certainly recognize the benefits of scale through a potential combination. However, we have agreed that it is best to move forward on our own," Marcelo Claure, the Sprint CEO, said at the time.
Sprint and T-Mobile’s announcement is just the latest step in an ongoing movement towards telecom consolidation. AT&T is in talks to acquire Time Warner, which owns CNN and CNNMoney. The outcome of that $85 billion merger-in-the-making depends on a case in federal court, which is pending the decision of the judge.
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