Sunday, April 29, 2018

Key points of the T-Mobile and Sprint merger agreement

T-Mobile US and Sprint reached a definitive agreement to merge in an all-stock transaction.  Deutsche Telekom and SoftBank Group will roll their entire economic ownership stakes into the new company, which retain the name T-Mobile. DT currently holds a 62% stake in T-Mobile US. Softbank currently holds an 83% stake in Sprint. The deal will require regulatory approvals.

Key points of the deal:

  • the transaction has a fixed exchange ratio of 0.10256 T-Mobile shares for each Sprint share or the equivalent of 9.75 Sprint
  • shares for each T-Mobile US share. 
  • the deal has an implied enterprise value of approximately $59 billion for Sprint and approximately $146 billion for the combined company.
  • the companies cite the ambition to build the most robust, nationwide 5G network as a primary driver for the deal, enabling the U.S. market to take a global lead in 5G.
  • the companies say a rapid rollout of 5G will drive job creation across the broader U.S. economy and will "be good for consumers, employees and investors." 
  • the companies are estimating a projected ~$40 billion in total capital investment over 3 years in achieving integration, expansion and building out 5G with significant labor investment
  • the companies are projecting to have more employees on the combined payroll than as standalone businesses
  • the network integration plan will use the T-Mobile infrastructure as the "anchor" network. The plan is to deploy 2.5 GHz spectrum on T-Mobile sites and the full T-Mobile
  • spectrum portfolio on Sprint “keep” sites
  • the new T-Mobile network will add approximately 85k macro sites and 50k small cells
  • the new company will be headquartered in Bellevue, Washington, with a second headquarters in Overland Park, Kansas.
  • John Legere, current President and CEO of T-Mobile US, will be CEO, and Mike Sievert, current Chief Operating Officer of T-Mobile, will serve as President and Chief Operating Officer of the combined company. 
  • Tim Höttges, current T-Mobile US 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.
  • there is no break-up fee for the deal
  • DT and Softbank have a lock-in agreement to maintain their ownership stakes for four years, subject to certain conditions.

“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 John 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.”

In November 2017, print and T-Mobile called off their previous merger discussions 

See also