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Your quick guide to the T-Mobile and Sprint merger deal

Your quick guide to the T-Mobile and Sprint merger deal

It is done (actually, there is still that bit about regulatory approval -- more on this later). T-Mobile and Sprint have announced that they are going to merged as one big mobile operator, at least one that might give industry leaders Verizon Wireless and AT&T a run for their money. 

The Basics

T-Mobile (the number 3 carrier in the United States) and Sprint (the number 4 in the country) have reached an agreement to merge by way of an all stock transaction. Based on closing share rates as of last Friday, the total estimated enterprise value for Sprint is at around $59 billion, while the approximate enterprise value of the combined business entity is at $146 billion. The new merged entity will use the name T-Mobile.

A Brief History

Verizon Wireless and AT&T are considered the two dominant wireless service providers in America, and while T-Mobile and Sprint have since joined to become the Big Four, the gap between the top two and the rest has remained very, very wide. This is the main idea behind the T-Mobile and Sprint merger agreement -- to combine their resources in order to take on the duopoly.

Both T-Mobile and Sprint have tried merging before, albeit unsuccessfully. In 2014, the deal was opposed by US regulators (then under the administration of President Barack Obama). But when Donald Trump became President last year, merger talks had renewed. After a stumble last November (discussions had stopped because disagreements over the terms of the deal), the deal was officially confirmed just this weekend.

Regulatory Approval

The merger deal may have already been announced by the parties involved, but it will still go through regulatory approval. According to several industry watchers, the agreement has a 50/50 chance of getting approved. Some, however, are more careful with their predictions, considering the US government seems a bit wary of mergers these days (like how it tried to derail the AT&T and Time Warner deal). 

But if the deal gets approved …

Quite simply, the Big Four will become the new Big Three. Some will lament the idea of a narrowed range of national carrier options, while others may be okay with welcoming a new combined business entity that offers better wireless service and more affordable pricing (as promised by T-Mobile). The big bosses of T-Mobile are already claiming that by having the Uncarrier combine its resources with Sprint, it is now in a good position to roll out better, faster, and perhaps even cheaper networks just in time for the coming of 5G.

Consumer advocacy groups, however, are not buying the promise of reduced pricing. Shrinking the Big Four into just the Big Three might actually produce an opposite result -- raising prices because of a lesser number of service providers in the competition. But a number of analysts are also saying that pricing will remain neutral.

Wait -- what about existing Sprint subscribers?

T-Mobile and Sprint have not exactly revealed their plans with regards to migrating Sprint customers to T-Mobile’s network. Things get a bit complicated by the fact that while T-Mobile’s network is based on GSM, Sprint’s is based on CDMA. Still, T-Mobile has claimed that there are currently around 20 million Sprint mobile devices that can work on T-Mobile’s network, particularly iPhones and Samsung phones. As for the others, it could take three years (more or less) to migrate them to the Uncarrier.