T-Mobile Closes Merger With Sprint, and a Wireless Giant Is Born
A new wireless giant has entered the scene.
T-Mobile and Sprint announced the closing of their $30 billion merger on Wednesday, the result of a long-in-the-works effort by both companies to speed the progress of wireless technology and put up a fight against AT&T and Verizon, the two companies that have long dominated the industry.
As part of finishing the deal, John Legere, the boisterous, magenta-clad chief executive who led T-Mobile for nearly a decade, handed over leadership reins to his longtime second-in-command, the more buttoned-up Mike Sievert.
The new business, called T-Mobile, will have about 100 million customers. To keep them and add to their ranks, the company plans to quickly develop the fifth-generation wireless technology that will bring broadband-style service through the air and is seen as a critical component of the nation’s infrastructure. T-Mobile has said that deploying 5G would have taken much longer and cost much more without the addition of Sprint.
Upgrading the networks also makes T-Mobile a formidable challenger to AT&T and Verizon, Mr. Sievert said in an interview. “It used to be that customers were forced to choose: Do you want a better network? Or a better value? Now you don’t have to choose,” he said.
The merger is the latest in a wave of corporate deals that, together, have topped $200 billion in the past two years. In June 2018, AT&T’s bid to buy Time Warner was approved, giving the phone giant control of CNN, HBO and the Warner Bros. film and TV studios. Shortly afterward, the Walt Disney Company beat out Comcast to buy the majority of Rupert Murdoch’s 21st Century Fox empire. Late last year, Shari Redstone combined her family’s two businesses, CBS and Viacom.
T-Mobile also envisions taking on cable operators, once its 5G service is up and running. In theory, 5G would allow home viewers to stream shows and movies at speeds they had only been able to get through the cable companies. “It’s the least competitive market I’ve ever seen,” Mr. Sievert said. Most regions of the country have only one cable company servicing the area.
The deal appeared nearly complete in February, after T-Mobile and Sprint beat back a court challenge from attorneys general in 13 states and the District of Columbia.
The suit was brought in June after regulators at the Justice Department and the Federal Communications Commission approved the merger plan. The states argued that the combination of T-Mobile and Sprint would reduce competition, lead to higher cellphone bills and place a financial burden on lower-income customers.
Letitia James, the New York attorney general, a key plaintiff in the case, had argued that the merger would cost subscribers at least $4.5 billion annually. She called the February ruling in favor of the deal “a loss for every American who relies on their cellphone for work, to care for a family member and to communicate with friends.”
With the completion of the merger, the number of major carriers in the United States stands at three — for now. To obtain regulatory approval, T-Mobile and Sprint agreed to sell off certain assets, including Sprint’s prepaid wireless business, to the satellite TV service Dish. The pay-TV operator hopes to become a new fourth carrier, in place of Sprint.
The fight for customers among the major carriers has driven subscription prices downward. The average monthly wireless bill has fallen by over 25 percent in the past decade, according to data from the Bureau of Labor Statistics. Wireless carriers still enjoy fat profits, but they have flattened or declined in recent years.
The T-Mobile deal technically faces one more hurdle. The California Public Utilities Commission, which governs telecommunications services in the state, has yet to sign off on the merger.
The companies closed the deal Wednesday after Sprint made a clever technical maneuver. The company withdrew its application to the California agency after changing how it delivered voice calls. Last week, the carrier switched to an internet-based system for phone calls, meaning Sprint no longer makes use of landlines. That effectively nullified the commission’s authority over the deal, according to the company.