We might be just a couple weeks away from finding out if a major deal will occur in the U.S. wireless industry. Deutsche Telekom and SoftBank are seemingly well on their way to creating a single carrier through two existing brands. They’ve been locked into negotiations for several months, and a new report suggests a deal could be announced in October.
T-Mobile and Sprint, according to Reuters, are nearing an agreement that would see the two carriers become one.
The report states both of their parent companies would remain co-owners of the new company; however, it probably won’t be an equal split. While SoftBank would own around 40 percent and exist as the minority owner, Deutsche Telekom is expected to continue its role as majority owner. The German telecommunications company currently owns more than 60 percent of T-Mobile.
A merger between T-Mobile and Sprint has been discussed before, but the political climate in the U.S. a lot kinder now towards mergers such as these than before. The FCC would likely give little resistance to the merger of two major carriers. Under the previous administration, the FCC and other government agencies stopped pending deals for a similar merger and an offer for AT&T to buy T-Mobile. The pro-business views today would encourage SoftBank and Deutsche Telekom to make something happen if they wish.
Still, there’s no guarantee talks will avoid falling apart yet again.
The new carrier would be led by John Legere, the man who’s been at the helm of Team Magenta since 2012. Marcelo Claure, Sprint’s CEO, doesn’t have a role defined in any reporting so far. With T-Mobile’s quick rise in recent years, it makes sense for Legere to being the leader.
There are a couple questions about what Sprint’s future is in the event the merger goes through. Its network, which lags behind the competition technologically, uses a much different standard than T-Mobile’s. That makes a transition of customers from Sprint’s network to T-Mobile’s network incredibly difficult. One option is to create a program in which existing Sprint customers can switch to T-Mobile and receive a new phone at a discount. The carrier could also have Sprint’s brand exist as a low-cost offering while T-Mobile is the flagship brand.
Terms of a deal, once finalized, will be followed by the parent companies performing due diligence on each other. If their finances look accurate and merging makes sense, the merger between T-Mobile and Sprint should be confirmed by the end of next month.
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