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US Wireless Carriers T-Mobile and Sprint to Merge in USD 146bn Deal
Monday 30 April 2018

30 April 2018 - US-based wireless carriers T-Mobile US (NASDAQ: TMUS) and Sprint Corp. (NYSE: S) have entered into a definitive agreement to merge in an all-stock transaction at 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 companies said.

Based on closing share prices on April 27, this represents a total implied enterprise value of approximately USD 59bn for Sprint and approximately USD 146bn for the combined company.

The combined company will be named T-Mobile, and it will be a force for positive change in the US wireless, video, and broadband industries.

According to the companies, the combination of spectrum holdings, resulting network scale, and expected run rate cost synergies of USD 6+bn, representing a net present value of USD 43+bn will supercharge T-Mobile's Un-carrier strategy to disrupt the marketplace and lay the foundation for US companies and innovators to lead in the 5G era.

The New T-Mobile 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 continue to lead the world in the coming 5G era, as US companies did in 4G.

The new company will be able to light up a broad and deep 5G network faster than either company could separately.

T-Mobile said it deployed nationwide LTE twice as fast as Verizon and three times faster than AT and T, and the combined company is positioned to do the same in 5G with deep spectrum assets and network capacity.

Following closing, the new company will be headquartered in Bellevue, Washington, with a second headquarters in Overland Park, Kansas John Legere, current president and chief executive officer of T-Mobile US and the creator of T-Mobile's successful Un-carrier strategy, will serve as chief executive officer, and Mike Sievert, current chief operating officer of T-Mobile, will serve as president and chief operating officer of the combined company.

The remaining members of the new management team will be selected from both companies during the closing period. 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.

It is critically important that America and American companies lead in the 5G era. Early US leadership in 4G fueled a wave of American innovation and entrepreneurship that gave rise to global mobile Internet leaders, creating bns in economic value and job growth. America's early 4G leadership is credited with creating 1.5m jobs and adding bns to the US GDP.

With 5G, the stakes are even higher because 5G will be even more transformational.

Only the combined company will have the network capacity required to quickly create a broad and deep 5G nationwide network in the critical first years of the 5G innovation cycle the years that will determine if American firms lead or follow in the 5G digital economy.

With Sprint's expansive 2.5 GHz spectrum, T-Mobile's nationwide 600 MHz spectrum, and other combined assets, the New T-Mobile plans to create the highest capacity mobile network in US history.

Compared to T-Mobile's current network, the combined company's network is expected to deliver 15x faster speeds on average nationwide by 2024, with many customers experiencing up to 100x faster speeds than early 4G.

Neither company standing alone can create a nationwide 5G network with the breadth and depth required to fuel the next wave of mobile Internet innovation in the US and answer competitive challenges from abroad.

Neither can AT and T and Verizon in the near term, even though they will still respectively own 34% and 172% more spectrum than the combined company.

The boards of directors of T-Mobile and Sprint have approved the transaction. Deutsche Telekom and SoftBank Group are expected to hold approximately 42% and 27% of diluted economic ownership of the combined company, respectively, with the remaining approximately 31% held by the public.

The board will consist of 14 directors, 9 nominated by Deutsche Telekom and 4 nominated by SoftBank Group, including Masayoshi Son, chairman and CEO of SoftBank Group, and Marcelo Claure, CEO of Sprint. John Legere, CEO of the New T-Mobile, will also serve as a director.

Upon consummation of the transaction, the combined company is expected to trade under the symbol on the NASDAQ.

The new company will have some of the most iconic brands in wireless T-Mobile, Sprint, MetroPCS, Boost Mobile, Virgin Mobile and will determine brand strategy after the transaction closes.
The transaction is subject to customary closing conditions, including regulatory approvals.

This transaction is expected to close no later than the first half of 2019.

PJT Partners is acting as financial advisor to T-Mobile and rendered a fairness opinion to its board of directors. Goldman Sachs is acting as financial advisor to Deutsche Telekom and T-Mobile and rendered a fairness opinion to the T-Mobile board of directors.

Deutsche Bank also acted as financial advisor to T-Mobile. Wachtell, Lipton, Rosen and Katz is providing legal counsel to T-Mobile and Deutsche Telekom, with Cleary Gottlieb and DLA Piper serving as regulatory counsel.

Evercore is acting as financial advisor to a committee of independent directors of T-Mobile and rendered a fairness opinion, and Latham and Watkins is providing legal counsel to the committee of independent directors. Richards, Layton and Finger is serving as Delaware Counsel. Morgan Stanley served as financial advisor to Deutsche Telekom. Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, and RBC are providing T-Mobile with committed debt financing to support the transaction, and PJT Partners is advising T-Mobile on the debt financing associated with the transaction.

The Raine Group LLC is acting as lead financial advisor to Sprint. J.P. Morgan is also acting as a financial advisor to Sprint. Centerview Partners LLC is acting as financial advisor to the independent transaction committee of the board of directors of Sprint.

The Raine Group LLC, J.P. Morgan and Centerview Partners LLC each rendered fairness opinions to the board of directors of Sprint. Morrison and Foerster LLP is lead legal counsel to Sprint and for SoftBank Group. Goodwin Procter LLP is legal counsel to the independent transaction committee of the board of directors of Sprint.

Skadden, Arps, Slate, Meagher and Flom LLP is regulatory co-counsel and Potter Anderson Corroon LLP is Delaware Counsel. Mizuho Securities Co., Ltd. and SMBC Nikko Securities Inc. are acting as financial advisors to SoftBank Group.
Details
Date Published: 30/04/2018
Target: Sprint Corp
Country: USA
Deal Size: 146bn (USD)
Sector: Telecommunications
Type: Merger
Financing: Stock
Status: Agreed
Vendor:
Buyer: T-Mobile US
Buyer Advisor: Evercore , Latham and Watkins , Richards, Layton and Finger , Morgan Stanley , PJT Partners
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