Deutsche Telekom and Softbank have completed the merger of their US mobile operators T-Mobile and Sprint. T-Mobile's takeover of its smaller rival Sprint is expected to strengthen its position as challenger to the top US mobile operators AT&T and Verizon. The company will be lead by former T-Mobile COO Mike Sievert, who takes over from John Legere as CEO from 01 April, when the new T-Mobile officially launches.
The companies first agreed the all-stock merger in April 2018. However, securing all the necessary regulatory approvals for combining the third- and fourth-largest mobile operators in the US took nearly two years. As part of a deal with federal regulators, the new operator will need to divest spectrum, customers and other assets to Dish Network to help it create a new competitor on the market.
USD 43 billion in synergies
The USD 43 billion in synergies from integrating T-Mobile and Sprint are expected to release extra cash for shareholders as well as investing in the mobile network, the roll-out of 5G services and T-Mobile's 'un-carrier' pledges of competitive prices for customers. Commitments to expand broadband coverage and maintain low-price plans were also given to regulators to secure clearance for the merger. T-Mobile expects the cost savings from the merger to outweigh the integration costs within three years of closing.
The merged company will have around 140 million customers, of which more than 100 million retail branded customers, and annual revenues of USD 7.7 billion. Their aggregate spectrum holdings of 300 MHz are almost double the frequencies held by Verizon and AT&T and are expected to help T-Mobile significantly improve its network coverage.
Sprint's shares will cease trading as of 01 April. Under the new ownership structure, Deutsche Telekom holds 43 percent of T-Mobile shares, Softbank 24 percent, and the remaining 33 percent are free float. A shareholders agreement means Telekom can vote Softbank's shares, giving it a 67 percent voting share. Telekom can also name nine of 14 board members, and its CEO Tim Hoettges will serve as chairman.
No change for Sprint customers
Sprint said customers will see no immediate changes to services, and both brands will be maintained for the moment. Over time, it will transition customers to the T-Mobile services.
T-Mobile announced immediately plans for a new debt offering, which is expected to kick of a restructuring of the two companies' debt. Deutsche Telekom said the company will repay USD 14 billion in intragroup financing, including USD 8 billion upon the merger completion. The formal change in ownership also gives Sprint bondholders the right to prematurely terminate some of the Sprint bonds. A secured bridge loan facility has been made available by a banking syndicate for up to two years for initial financing.
