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T-Mobile and Sprint Agree on Tentative Terms for Merger

T-Mobile and Sprint Agree on Tentative Terms for Merger Credit: Reuters
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T-Mobile and Sprint are nearing a potential merger. Reportedly, the two carriers are close to agreeing on “tentative terms” for such a deal, Reuters described on Friday.

Sprint’s stock price rose Friday in the wake of initial reports suggesting that it could merge with rival T-Mobile, CBS News reported. Although the terms are preliminary at this point, the two companies could finalize an agreement by October, according to sources familiar with the matter cited by Reuters. News of the deal comes as the entire telecom industry explores how it spur investment in 5G wireless technology and infrastructure.

T-Mobile’s parent company, Deutsche Telekom, would retain a majority stake in the merger, while Sprint’s owner SoftBank would own between 40 and 50 percent. Allegedly, T-Mobile CEO John Legere would lead the combined company. If the deal pans out, it would represent a significant consolidation of the current U.S. telecom market.

If the deal pans out, it would represent a significant consolidation of the current U.S. telecom market. Sprint and T-Mobile are currently the third and fourth largest carriers in the country. But even with a combined subscriber base of about 133 million customers, the merged company would still be slightly smaller than the two largest U.S. carriers, Verizon and AT&T — who have around 147 million and 136 million subscribers, respectively.

Verizon Wireless147.2 million(Q2 2017)
AT&T Mobility136.5 million(Q2 2017)
T-Mobile US73.9 million(Q2 2017)
Sprint Corporation59.7 million(Q1 2017)

The two carriers had previously discussed a merger back in 2014, with Sprint seeking the majority stake. The deal fell apart, however, due to FCC and Justice Department concerns that it could hurt competition in the marketplace and raise wireless costs for customers.

The new deal could still be struck down by regulatory agencies, although the resumed talks hint that the companies believe the U.S. antitrust environment will be more receptive to the merger. Earlier this year, Legere noted that the deal could face a “potential future outcome” under the Trump administration.

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