Wells Fargo: Combined T-Mobile/Sprint would top AT&T and become second largest U.S. carrier
The analysts' involved in the report said that T-Mobile will pay $10.84 a share for Sprint, which works out to a 27% premium over the current price of $8.55. Why would T-Mobile buy a competitor that isn't growing nearly as fast as it is? For one thing, Sprint has hoarded a ton of 2.5GHz spectrum. While the high-frequency airwaves don't travel nearly as far as the 600MHz spectrum that T-Mobile won in the recent FCC auction, T-Mobile's technical team is salivating at the chance to grab Sprint's portfolio.
T-Mobile executives have done a 180-degree change and now consider the 2.5GHz airwaves a "treasure trove that you could do amazing things with." With 5G launching in as soon as three years, T-Mobile has already announced plans for a coast-to-coast 5G pipeline; Sprint's spectrum could come in handy when it comes to building out a 5G network.
Did you know 3+4=2? Take the third largest carrier in the U.S., add the fourth largest carrier and suddenly you have the second-largest wireless carrier in the states. Prior to the deal, Verizon (134.2 million customers) and AT&T (113.9 million) were the top two state-side wireless operators. But combine number three T-Mobile (72.6 million) and number four Sprint (59.7 million) and you end up with a company carrying 132.3 million subscribers. That would top AT&T's head count and be only 1.9 million subscribers short of Verizon.
Now, the question is whether there will be a deal between T-Mobile and Sprint. T-Mobile CFO Braxton Carter says that talks between the two will definitely happen, and he called Sprint "a huge prize." Sprint CEO Marcelo Claure says that combining T-Mobile and Sprint creates a "turbocharged maverick" fighting for consumers.
The last time both firms were in merger talks, U.S. regulatory agencies like the FCC and DOJ made comments about not allowing such a deal to happen. But with the new administration in Washington D.C., things could be different this time around.