T-Mobile and Sprint rejig terms of their megamerger

By

T-Mobile/Sprint
The $26 billion deal has been years in the making.
Photo: T-Mobile/Sprint

T-Mobile and Sprint have finalized their deal terms as their all-stock “New T-Mobile” merger continues to head toward completion. They’re hoping that the megamerger could be officially approved as early as April 1.

Originally, Sprint owner SoftBank was scheduled to trade 9.75 shares for each T-Mobile share. According to the new agreement, it will trade 11 shares per T-Mobile share. Sprint’s other shareholders will get the original exchange ratio.

T-Mobile and Sprint’s mega deal

The Boards of Directors of T-Mobile and Sprint have unanimously approved the amendment. According to a press release put out by the two companies, “The amendment has no impact on T-Mobile’s previously stated outlook on the New T-Mobile’s synergies, long-term profitability and cash generation.”

“We are on the verge of being able to do what we’ve set out to do from day one — reshape a broken wireless industry and create the new standard for consumers when it comes to value, speed, quality and service,” said Mike Sievert, COO and President of T-Mobile, who will become CEO this May. “The New T-Mobile is literally going to change wireless for good and now we’re almost ready to get to the fun part: bringing our teams together, building this supercharged Un-carrier and becoming the envy of the wireless industry and beyond!”

The new deal means that T-Mobile parent company Deutsche Telekom will own around 43% of the combined company. Previously, it would have been just under 42%. SoftBank will own 24%, rather than the previous 27%. The remaining 33% will be held by the public, increased from 31%.

As the Wall Street Journal notes (paywall):

“To effect the changes, SoftBank has agreed to surrender 48.8 million T-Mobile shares to the new company, to be called T-Mobile. Those shares could be reissued to SoftBank if T-Mobile’s stock price reaches certain milestones beginning two years after the deal closes.”

Opposition to the deal

T-Mobile and Sprint have been trying to merge in some combination since 2013. Two earlier attempts in 2013 and 2017 were ditched before the current $26 billion merger agreement was made in 2018.

Attorneys general from 13 states, in addition to the District of Columbia, had opposed the merger. They were concerned a merger would reduce competition in the industry and could drive up cellphone bills. However, a U.S. district judge recently shot down the complaint, approving the deal.

The deal won’t officially be done until the California Public Utilities Commission approves the merger.

As part of the merger, T-Mobile and Sprint will sell off a large part of their businesses to pay-television operator Dish Network. It will form a new major wireless company.