Sprint (NYSE: S) and T-Mobile (NASDAQ: TMUS) have sealed a blockbuster merger agreement, producing a telecom behemoth that values the combined company at $146 billion, the two carriers announced on Sunday.
Both Sprint and T-Mobile have lagged behind Verizon and AT&T, the two largest wireless companies, and the proposed deal keeps the new company entrenched at number three. The proposed all-stock deal values Sprint at about $59 billion and the combined company at $146 billion, including debt. Without debt, the deal values Sprint at $26.5 billion.
The new company — which is touting an ability to create a large scale 5G network and thousands of U.S. jobs — will preserve T-Mobile's name, and will have dual headquarters in Bellevue, Washington, and Overland Park, Kansas. John Legere, T-Mobile's CEO, will retain the top job in the newly formed carrier.
"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," Legere said in a statement.
If approved, the combined T-Mobile-Sprint would have an estimated 120 million subscribers but would be better positioned to compete against Verizon (NYSE:VZ) and AT&T (NYSE: T). Both companies have more than 100 million subscribers each, and both have mapped out a strategy for transitioning to 5G within the near term.
"We remain focused on providing customers with the most reliable 4G network as we build the world's first and best Ultra-Wideband 5G network — not just a proposal that may or may not happen in the next couple of years," Verizon spokesman Richard Young said in a statement
Shares in Sprint tanked 74 cents, or 11.4%, to $5.76, while those for T-Mobile ducked $3.54, or 5.5%, to $60.98.
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