T-Mobile builds 5G muscle with Sprint union Watch Now

T-Mobile and Sprint have announced they have entered into a definitive agreement to merge in an all-stock transaction.

T-Mobile will acquire Sprint for approximately $26 billion, at a fixed exchange ratio of 9.75 Sprint shares for each T-Mobile share

The combined company will be called T-Mobile.

The new company claims it will have the network capacity to rapidly create a nationwide 5G network with the breadth and depth needed to enable US firms and entrepreneurs to lead the world. The company also claims it will be able to light up its 5G network faster than either company could separately or than its competitors AT&T and Verizon.

T-Mobile majority-owner Deutsche Telekom will own roughly 40 percent of the combined company. Along with Japan's SoftBank, they will have voting control of the new telecom.

In the past, clashes over who calls the shots stopped the deal.

After the deal is closed, the new company will be headquartered in Bellevue, Washington, with a second headquarters in Overland Park, Kansas.

John Legere, T-Mobile's chief executive officer, will serve as the combined companies' chief executive. Mike Sievert, T-Mobile's current chief operating officer, will additionally serve as president of the combined company.

The remaining members of the new management team will be selected from both companies during the closing period. Tim Höttges, T-Mobile's current 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, Sprint's current chief executive, will serve on the board of the new company.

"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 Legere in a statement.

Read more: Sprint, T-Mobile finalizing merger with John Legere as chief | Sprint and T-Mobile restore merger talks | TechRepublic: T-Mobile: US government has 'enormous role' to play in freeing up spectrum for 5G | Techmeme

"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," he added.

The companies also claim that with Sprint's 2.5 GHz spectrum and T-Mobile's nationwide 600 MHz spectrum, they will create the highest capacity mobile network in the United States. Compared to T-Mobile's network today, the combined company's network is expected to deliver 15-times faster speeds on average nationwide by 2024, with many customers experiencing up to 100-times faster speeds than early 4G

T-Mobile admits that AT&T and Verizon still own, respectively, 34 percent and 172 percent more spectrum than the combined company. Even so, T-Mobile states that neither rival can rapidly build nationwide 5G and their planned 5G networks will only be available sporadically in just a handful of very limited areas.

Why? T-Mobile and Sprint say to to build nationwide 5G, their rivals must either have to kick current customers off LTE, which would take years, or use a type of spectrum (millimeter wave) that can only carry a signal 2,000 feet from a cell site -- versus multiple miles for other spectrum -- making it nearly impossible for either of them to create a truly nationwide 5G network quickly.

"Going from 4G to 5G is like going from black and white to color TV," said Sprint's Claure, Sprint's CEO. "It's a seismic shift -- one that only the combined company can unlock nationwide to fuel the next wave of mobile innovation."

The new teleco power also claims prices will drop as competition heats up. The new, merged T-Mobile will have lower costs, greater economies of scale, and unprecedented network capacity -- a winning combination that should make wireless, and adjacent industries like cable and broadband, more affordable for everyone.

We'll see about these claims.

First, the deal must be approved by the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC). The transaction is expected to close no later than the first half of 2019.

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