Click to Skip Ad
Closing in...

Report: T-Mobile and Sprint have agreed on a price for the nightmare merger

Published Apr 27th, 2018 4:36PM EDT
T-Mobile Sprint merger closer, report says
Image: Shutterstock/BravoKiloVideo/BGR

If you buy through a BGR link, we may earn an affiliate commission, helping support our expert product labs.

Sprint and T-Mobile have agreed on pricing for a deal that would value Sprint at $24 billion, according to Bloomberg. If the reports of the details are true, it would mean that the two sides have overcome the biggest difference that torpedoed talks last year, and a deal seems more likely than ever.

According to Bloomberg‘s source, the deal would value Sprint at $24 billion. T-Mobile owner Deutsche Telekom would receive a 42 percent stake in the company, but retain strategic control with a 69 percent voting interest. Talks last year reportedly stalled as neither Deutsche Telekom nor Sprint owner Softbank wanted to surrender control of the merged company.

The big question remaining is whether or not regulators will allow a merger to take place. Analysts have argued the case both ways: the industry is functionally competitive right now (for the first time in a decade!), so a merger should be feasible. On the other hand, a merger would remove the cheapest wireless network in America, Sprint, from the picture, and remove downwards price pressure from the marketplace. Right now, T-Mobile and Sprint are forced to compete for the bottom of the market, and T-Mobile, which has far fewer customers than Verizon or AT&T, is forced to use things like unlimited data plans to bribe subscribers away from the big two.

With Sprint and T-Mobile merging, all that would likely to go away. We can see what happens when you have three equally sized wireless players by looking at Canada. Competition is low, unlimited plans are nonexistent, and a reasonable plan costs over $100 a month.

Normally, such a mammoth merger would be subject to close scrutiny from the FCC, but the new-look FCC under Trump appointee (and former Verizon lawyer) Ajit Pai has shown no signs of wanting to be tough on big business. It’s moved to strike down net neutrality rules, showed no interest in limiting the massive AT&T-Time Warner merger, and is generally viewed as being unlikely to stop a Sprint-T-Mobile merger.

However, the Justice Department has recently been active within the telecoms interest, and a merger would surely be subject to close scrutiny. The DoJ is currently investigating whether AT&T and Verizon have been colluding to make it harder for customers to switch networks, and a JP Morgan analyst suggested that investigation could have a chilling effect on merger talks. “While the DoJ and IRS have brought other probes against fixed and wireless providers in the past, we have never seen a substantial impact from those and would be surprised to see a painful outcome for carriers in this one,” JP Morgan’s Philip Cusick said in a note. “A DOJ view that carriers are colluding could mean that a potential Sprint and T-Mobile merger would face higher scrutiny, making us somewhat less optimistic about that deal.”

Chris Mills
Chris Mills News Editor

Chris Mills has been a news editor and writer for over 15 years, starting at Future Publishing, Gawker Media, and then BGR. He studied at McGill University in Quebec, Canada.