As expected, T-Mobile and Sprint announced plans Sunday to merge in an all-stock transaction. The combined company, dubbed “New T-Mobile,” will be led by T-Mobile’s John Legere as CEO and be headquartered in T-Mobile’s home base of Bellevue, Washington. The companies said they will host a “second headquarters” in Sprint’s home base of Overland Park, Kansas.
Importantly, the companies said the newly combined company will invest up to $40 billion toward its new network and business in its first three years of operation, which the companies said represents 46% more spending than T-Mobile and Sprint spent combined in the past three years. Sprint and T-Mobile said New T-Mobile will deploy 5G nationwide across spectrum including T-Mobile’s 600 MHz spectrum and Sprint’s 2.5 GHz spectrum.
“Compared to T-Mobile’s network today, the combined company’s network is expected to deliver 15x faster speeds on average nationwide by 2024, with many customers experiencing up to 100x faster speeds than early 4G,” the companies said in a release announcing the merger.
Further, the companies said the deal would create additional jobs rather than reduce jobs—promises likely geared toward obtaining regulatory approval. They said that more than 200,000 people will work on behalf of the combined company in the U.S. if the merger is approved, and it will create jobs by building out a network and retail footprint in areas including rural regions.
In terms of finances, the companies said the transaction represents 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. The companies said the transaction represents an implied enterprise value of $59 billion for Sprint and $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 companies said. They added that they expect run rate cost synergies of more than $6 billion, representing a net present value of more than $43 billion.
In terms of leadership, T-Mobile’s Legere will be CEO and T-Mobile’s Mike Sievert will be the combined company’s president and COO. “The remaining members of the new management team will be selected from both companies during the closing period,” the companies said.
And Deutsche Telekom’s Tim Höttges will serve as chairman of the board for the new company, while SoftBank’s Masayoshi Son and Sprint’s Marcelo Claure will serve on the board of the new company. That’s likely a key situation considering Son reportedly walked away from merger discussions between the two companies in November due to concerns about losing control of a hand in the U.S. market.
As noted by Recon Analytics, the combined company, based on fourth-quarter numbers, will sit behind Verizon and AT&T in terms of total customers.