T-Mobile and Sprint announced on Sunday that they had agreed to join a new company that would change the wireless breadth of the US by reducing it to three major mobile phone providers.
This agreement would help companies reduce costs and could be a stronger competitor for larger AT & T and Verizon. However, consumers may see higher prices because the combined company would not have to offer as many promotions as to attract customers.
Sprint lowered T-Mobile’s offer
The projected value of all Sprint securities is about $ 59 billion, and the combined $ 146 billion.
Sprint lowered T-Mobile’s offer more than three years ago after worrying about wireless competition in Obama’s administration. Both were going to unify in October, but the deal was also canceled.
Sprint and its owner, the Japanese SoftBank conglomerate, have long been seeking an agreement because the company has been trying to compete on its own.
Sprint has a lot of debt and has posted a number of annual losses. The company has cut costs and become more attractive to customers, says BTIG analyst Walter Piecyk, but has invested heavily in its network and does not have sufficient rights to quality service in rural areas.
T-Mobile, meanwhile, has been adding customers for a long time. After the government’s continued AT & T’s bid to buy the company in 2011, T-Mobile has driven many changes that are beneficial to consumers, such as Breaking Biannual Contracts and Unlimited Data Plans. Consumers pay less for mobile phone services, due to T-Mobile’s impact on industry and resulting price wars.
“T-Mobile does not need a merger with Sprint to succeed, but Sprint may need one to survive,” Piecyk wrote in a research report.
MoffettNathanson analyst Craig Moffett, however, said T-Mobile’s dynamics are slowing down, which may explain why the company and its parent, German company Deutsche Telekom, “have warmed up on the idea of a merger sooner rather than later.”
The parent company should have almost as many wireless subscribers as Verizon and AT & T have now. T-Mobile and Sprint could save money by linking their networks and closing stores.
Communications workers in America, the telecommunication workers’ association, say the merger will cost at least 20,000 jobs in the US and will reduce competition in the wireless network, which will bring higher prices.
Cost savings, however, could help the combined company build infrastructure and buy the rights to the broadcasting waves needed for the fast 5G service that is expected to be operational over the next few years