Arthur J. Villasanta – Fourth Estate Contributor
Bellevue, WA, United States (4E) – T-Mobile, which is owned by Germany’s Deutsche Telekom, and Sprint, which is owned by Japan’s Softbank, have finally agreed to a merger that will create a new firm whose main aim will be to dominate the immensely profitable 5G market at the expense of Verizon and AT&T.
T-Mobile and Sprint are the third and fourth largest mobile providers in the USA with a combined customer base of 130 million subscribers. The combined firm will carry the name “T-Mobile” and will be run by executives from Deutsche Telekom. Under the deal, Deutsche Telekom will own 42% of the combined company and control its board. Softbank will hold a 27% stake
The new company, which is also referred to as the “New T-Mobile,” will have a market value of $146 billion. It will be headquartered in Bellevue, Washington, with a second headquarters in Overland Park, Kansas. John Legere, current President and Chief Executive Officer of T-Mobile U.S. and the creator of T-Mobile’s successful Un-carrier strategy, will serve as Chief Executive Officer. Mike Sievert, current Chief Operating Officer of T-Mobile, will serve as President and Chief Operating Officer of the combined company.
The remaining members of the new management team will be selected from both companies during the closing period. Tim Höttges, current T-Mobile U.S. Chairman of the Board, will serve as Chairman of the Board for the new company. Masayoshi Son, current SoftBank Group Chairman and CEO, and Marcelo Claure, current Chief Executive Officer of Sprint, will serve on the board of the new company.
Legere said the new firm will spend $40 billion on building a 5G mobile broadband network over the next three years. “Together, we will build the highest-capacity mobile network in US history!! I’m talking 30X more capacity than T-Mobile today!!” said Legere in one of a series of tweets.
“In the first three years, The New @TMobile will be able to invest ~$40 BILLION in the company,” tweeted Legere. “That’s nearly 50% more than both of us invested in the last three years. That’s also a wave of economic activity for the US.”
“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience — and do it all so much faster than either company could on its own,” said Legere. “As industry lines blur and we enter the 5G era, consumers and businesses need a company with the disruptive culture and capabilities to force positive change on their behalf.
Claure said the combination of these two dynamic companies can only benefit the U.S. consumer. “Both Sprint and T-Mobile have similar DNA and have eliminated confusing rate plans, converging into one rate plan: Unlimited. We intend to bring this same competitive disruption as we look to build the world’s best 5G network that will make the U.S. a hotbed for innovation and will redefine the way consumers live and work across the U.S., including in rural America.
“As we do this, we will force our competitors to follow suit, as they always do, which will benefit the entire country. I am confident this combination will spur job creation and ensure opportunities for Sprint employees as part of a larger, stronger combined organization, and I am thrilled that Kansas City will be a second headquarters for the merged company.”
Analysts say the combined company will have more muscle to compete against Verizon and AT&T (the first and second biggest U.S. telecoms firms), which both have more than 100 million subscribers each.
Only the combined company will have the network capacity required to quickly create a broad and deep 5G nationwide network in the critical first years of the 5G innovation cycle — the years that will determine if American firms lead or follow in the 5G digital economy.
With Sprint’s 2.5 GHz spectrum, T-Mobile’s nationwide 600 MHz spectrum, and other combined assets, the New T-Mobile plans to create the highest capacity mobile network in U.S. history. 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.
Neither company standing alone can create a nationwide 5G network with the breadth and depth required to fuel the next wave of mobile Internet innovation in the U.S. and answer competitive challenges from abroad.
The New T-Mobile will be better positioned for America’s inevitable shift to next generation 5G mobile broadband technology. “Going from 4G to 5G is like going from black and white to color TV,” said Claure. “It’s a seismic shift — one that only the combined company can unlock nationwide to fuel the next wave of mobile innovation.”
The new company expects prices to drop as competition heats-up. The New T-Mobile will have lower costs, greater economies of scale, and unprecedented network capacity, a combination that should make wireless, and adjacent industries like cable and broadband, more affordable for everyone.
The deal, however, is expected to attract regulatory scrutiny over its potential impact on customer prices.
Article – All Rights Reserved.
Provided by FeedSyndicate