Sprint and T-Mobile have reached an agreement to merge
Sprint and T-Mobile have finalized the terms of a merger, the two companies announced Sunday.
The boards of the two companies said shortly before noon that they had agreed to an all-stock transaction that would result in a combined $146 billion company. The merger, which still requires government approval, would represent a bid to challenge larger rivals AT&T and Verizon.
In statements released Sunday, T-Mobile and Sprint touted the combination as a means to deploy a 5G network, giving wireless customers faster data speeds.
But for Kansas City, Sunday's news could be a troubling omen. The deal is likely to shake up one of the Kansas City area’s largest employment centers, with nearly 6,000 employees at its Overland Park headquarters campus. A news release about the merger deal said Overland Park would serve as a second headquarters, but T-Mobile’s offices in Bellevue, Wash., would be the headquarters.
The combined company will be called T-Mobile. The companies have not announced decisions about the fate of the Sprint brand. It's unclear how the news would affect Sprint's presence in Overland Park, where the company has been downsizing since the 2004 Sprint-Nextel merger.
Reports that a deal was in the works had been circulating for several days. The two companies had reportedly resumed talks earlier this month.
Sprint CEO Marcel Claure posted a message on Twitter Sunday announcing the deal has been struck.
"We've just announced some incredibly exciting news — @sprint and @TMobile are joining forces," the tweet read in part.
T-Mobile CEO John Legere will lead the combined business that will be called T-Mobile. Another T-Mobile executive, Mike Sievert, will be president and chief operating officer.
Claure will join the combined company’s board of directors, but no management job was identified for him in the company’s release. Sprint Chairman Masayoshi Son, head of the Tokyo-based company that owns Sprint, also will be a director of the merged business.
A merger will require U.S. government approval, which many analysts say will be difficult to gain. The Federal Communications Commission had convinced Son in 2014 that regulatory approval of his plans then to merge Sprint with T-Mobile would not be worth seeking.
Sprint and T-Mobile had ended merger talks last November.
At the time, Sprint owner SoftBank Group Corp. balked when it could not win terms that gave it control over the merged wireless company. SoftBank, which has investments in many other technology businesses, considered a wireless network essential to its plans.
Rekindled merger talks reflected two circumstances equally important to the companies. A merger would eliminate more than $43 billion in costs, from network investments to payroll, which would be a substantial windfall for investors.
The companies also faced something of a deadline to pursue a merger now.
A government auction of federal airwaves for wireless carriers is expected to begin in November. As that auction process nears, the FCC will establish a quiet period that would ban merger talks involving bidders.
The industry had been under just such a quiet period until late April last year, when wireless carriers were bidding on airwaves that the FCC had purchased from television stations willing to move to new signals or go off the air.
Tracey Osborne Oltjen, president and CEO of the Overland Park Chamber of Commerce, said the city supports Sprint's efforts to secure a competitive advantage for the company on the next phase of the development.
"A combined T-Mobile/Sprint would benefit from our dedicated and highly skilled workforce in our region which has been Sprint’s strongest asset," Oltjen said.
"This talent base is key to our region’s innovation and entrepreneurial spirit."