Report: Sprint and T-Mobile merger plans are being finalized

Report: Sprint and T-Mobile merger plans are being finalized
A report published out of Asia on Sunday, states that both Sprint parent SoftBank, and T-Mobile parent Deutsche Telekom, are working out the final details of the merger between the two U.S. carriers. German telecom Dutsche Telekom currently owns 67% of T-Mobile, and the plan is for SoftBank to purchase more than 50% of T-Mobile's stock. SoftBank will use a combination of  stock swaps and cash to cover the larger than $16 billion price tag on the transaction.

Eight major banks will be financing the transaction, including large institutions like J.P. Morgan Chase and Deutsche Bank. SoftBank will originally finance the purchase by using brige loans, which will be replaced using debt issued by Sprint and other longer term solutions. Even though SoftBank already has 9 trillion yen ($88 billion USD) in debt on which it pays interest, the banks have decided to go ahead to fund the purchase.

Earlier this year, the deal was hung-up on the break-up fees that both sides would pay. This is important because both the FCC and the FTC have publicly been against the transaction, and SoftBank is taking a huge risk that it won't be able to finish what it starts. The same thing happened to AT&T when it tried to buy T-Mobile in 2011. Having to pull out of the deal, AT&T gave T-Mobile $3 billion and a ton of spectrum.

source: Nikkei via TmoNews

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55 Comments

1. billgates

Posts: 555; Member since: May 29, 2014

Oh boy! I am not seeing this as a good thing for t-mobile customers in the long term. I'd say all 5 customers will jump ship if this goes thru.

3. g2a5b0e unregistered

All 5 customers? Try about 45 million. Only about 6 million short of Sprint's total. In any event, there is no chance the FFC & the DOJ will allow this, so it really doesn't matter. It will just end up another very large break-up fee in T-Mobile's pocket.

4. PapaSmurf

Posts: 10457; Member since: May 14, 2012

And with that break up fee comes more money for spectrum and network upgrades. :')

5. g2a5b0e unregistered

Boom goes the dynamite.

20. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

If Son-boy wants to put his $ where his mouth is, have at it. The Feds have been very consistent in their response to his claims that a merger is in the best interests of the market - they don't buy it. DT is being quite smart in the response to Son-boy - let him finance additional spectrum and network upgrades through a break-up fee.

33. andynaija

Posts: 1259; Member since: Sep 08, 2012

You sound so southern when you say Son-boy...

50. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Would you like it better if I spelled it Son-boi?

39. lsutigers

Posts: 832; Member since: Mar 08, 2009

Except DT could give 3 shi*s about T-Mobile and wants to dump them and get out of the highly competitive US market.

51. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

T-Mo is an investment for DT. Of late, the investment has done rather well for DT (maybe even above water). DT gives a wee bit more than 3 sh*ts about T-Mo. Are you under water on a Sprint investment?

53. true1984

Posts: 865; Member since: May 23, 2012

i would say he's kinda right. dt has been trying to sell tmobile for years since they have been losing money.

6. g2a5b0e unregistered

FCC*, 5 char

13. zinger69

Posts: 86; Member since: Feb 13, 2014

If Softbank is willing to agree to a 2 billion breakup fee then something must trending in their favor. You just don't agree to that just for the hell of it. Especially after what happened with At&T and T-Mo. Son must know something we don't know to make him go ahead with the merger. I think the FCC will put some conditions in place, what they are I don't know.

15. g2a5b0e unregistered

I hear ya. I do believe he has an ace up his sleeve. He's a smart man. He wouldn't try otherwise. Regardless, I still don't think it will happen.

30. joe1blue

Posts: 169; Member since: Jul 25, 2013

I dont think it will happen and i hope it wont happen.

21. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Same thing was said (on this site) about AT&T. Look where that got them. Just because some investor thinks the Sun rises in the west and sets in the east, doesn't mean it actually does. Son-boy has had a good run on some of his investments. Not so for Sprint. His attempt to cover his investment in Sprint with an acquisition of T-Mo and then make his combined investment pay off by screwing the customers of the combined company is not going to fly. Unlike in other investments, he has to get the approval of the Feds this time around. Not. Gonna. Happen.

42. lsutigers

Posts: 832; Member since: Mar 08, 2009

Do you really think he is going to get a significant ROI on billions of dollars invested in Sprint / TMO by screwing over customers??? Be real man, the guy is a brilliant businessman looking to actually make money competing in the market by putting pressure on the duopoly with a rock solid network and lower prices.

45. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

You are the one who is living in a fantasy. If Son-boy were to be successful in acquiring T-Mo, how do you think he is going to fund the loans he is taking out from the banks to finance his acquisition? Hint: he is not going to pick up volume from lowering prices. They have already tried that game, and it didn't pan out for them. AT&T and VZW will pick up some disaffected customers, and Son-boy will price just below AT&T and VZW. Which is why the Feds aren't having any of the sh*t that Son-boy is trying to peddle to them.

40. lsutigers

Posts: 832; Member since: Mar 08, 2009

@zinger69 ding, ding, ding, ding, ding, ding. Me thinks you're on the money/.

10. billgates

Posts: 555; Member since: May 29, 2014

Calm down swiss cheese fanboys, I was just messing.

18. fobxman

Posts: 1; Member since: Jul 13, 2014

I guess what he trying to say is all 5 paying customers. LOL

27. Berzerk000

Posts: 4275; Member since: Jun 26, 2011

If Sprint and T-Mobile merge, there will only be 3 major players in the U.S. Verizon makes up 35% of the market in subscribers, AT&T has about 34%, and Sprint+T-Mobile will have about 30%. That will make it a very close game. It would be interesting to see what the carriers do if this goes through. Sprint/T-Mobile (I don't know which name would stick) would be fighting for that few extra percent that would put them above Verizon and AT&T, then Verizon and AT&T would do various promotions, price drops, etc. to keep their customers from leaving and attract new customers. Who knows, maybe they'll all be entered into the Illuminati, trade customers for a 33.3% split, and spike up their prices. One way the consumers win and we all get a nice show, and the other way I'll be buying one way tickets to Europe. Either way, it's gonna be interesting.

7. tatail

Posts: 261; Member since: Jan 08, 2010

lol good joke.. you forgot the zero somewhere.

8. networkdood

Posts: 6330; Member since: Mar 31, 2010

so, I am one of 5? Maybe there are 5 T mobile customers using a BB device...lol

11. Mxyzptlk unregistered

That's more people than I thought lol

23. meanestgenius

Posts: 22043; Member since: May 28, 2014

You think? Imagine that...

24. meanestgenius

Posts: 22043; Member since: May 28, 2014

Way to troll BlackBerry when they are not even mentioned in the article. Try to stay on topic next time....

26. tatail

Posts: 261; Member since: Jan 08, 2010

the problem is I have two account and a total of 8 lines on T-Mobile, so if their total customers are 5? I should be getting money back from T-Mobile for the other 3 lines? lol..

16. Professor

Posts: 223; Member since: Aug 02, 2013

I am also 1 of the T-Mobile customers changing to AT&T or Verizon if the merger is approved...

36. Joshua9007

Posts: 94; Member since: Jun 08, 2012

Why, so you can't have a larger network that has better service?!? The combined spectrum of the the company would be so large, that they will probably have to divest some to get the merger approved. If you are someone that is in a t-mobile coverage area (and I mean are covered by 4g, not voice only), then your service is good and will improve as soon as your able to take advantage of sprint's spectrum by adding extra panels to the t-mobile towers and vice-versa... making the site density higher and capacity from the extra spectrum on each site!! How is that a BAD THING!?!? Sprint customers may see immediate improvements too, as their towers will be able to add extra PCS 1900Mhz LTE carriers due to the pairing of combined spectrum more efficiently. For those who are in the rural areas surrounding a major city (not talking about places like Montana) Sprint has just started activating towers with their old nextel 800Mhz spectrum which sits below the normal cellular 850Mhz spectrum that verizon and At&t use for voice and 3G... meaning they should get similar propagation characteristics (aka. coverage and in-building reception will be similar in areas covered). This does not include the fact that t-mobile bought a some 700Mhz spectrum from verizon and is making deals with smaller carriers for more. Although the combined carrier will probably still lag the big 2 in rural coverage for quite a while because they will likely still focus on the major populated areas where their current customers are. They will do much better in the surrounding areas then either is doing currently on their own, because like the big 2 they will be able to spread the costs of carrying more towers over the larger customer base. T-Mobile customers have a reason to fear sprint because most of them left sprint to come to t-mobile while sprint was dragging their feet upgrading their network and flirting with bankruptcy... but they are making strides with their new network which is still not fully complete, and it is capable of handling any amount of new spectrum, and will be quite formidable even if the merger does not go through. Also, it will take a full phone cycle for any customers to see any of the changes to either network, and sprint customers will not all of a sudden crash t-mobile's network to a halt due to extra traffic. So do your homework and see when you are eligible for a new phone if the merged company is an improvement, or if you want to go to one of the other 2.

38. zinger69

Posts: 86; Member since: Feb 13, 2014

Yeah I'm sure why some of the T-Mo Fanboys are so riled up about this? More than likely it will be called T-Mobile and Legere will probably be tapped to run the company. As long as the coverage improves and and the same deals and policies stay the same I see no reason to get upset about it.

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