US telecom giants T-Mobile US and Sprint said yesterday they had agreed to a $26 billion all-stock deal.
The two companies said they believed they could win over skeptical regulators because the merger would create thousands of jobs and help the US beat China to creating the next generation mobile network.
The agreement capped four years of on-and-off talks between the third and fourth largest US wireless carriers.
It has set the stage for the creation of a company with 127 million customers that will be a more formidable competitor to the top two wireless players, Verizon Communications and AT&T.
US regulators, who have challenged in court AT&T's $85 billion deal to buy US media company Time Warner, are expected to grill Sprint and T-Mobile on how they will price their combined wireless offerings.
Verizon has 116 million US wireless customers, according to a spokesman, while AT&T has 93 million branded customers, as of the first quarter.
Their first round of merger talks ended unsuccessfully in 2014 after the administration of then-US President Barack Obama expressed competition concerns.
The new deal will create the highest-capacity US network, lower prices, create jobs and improve service in rural areas, said John Legere, the chief executive of T-Mobile and the new head of the proposed combined company.
The combined company, which will be called T-Mobile, will invest $40 billion over the next three years to upgrade its networks to accommodate the next generation 5G wireless technology, which is expected to have the speeds necessary to power drones and self-driving cars, Legere said in a statement.
The companies said during a conference call with analysts that the recent US tax overhaul would have a positive impact, and the combined company would not be a significant taxpayer until 2025.
T-Mobile and Sprint said they expected to complete their deal no later than the first half of 2019, an ambitious goal given the intense US regulatory scrutiny it will be subjected to.
T-Mobile will not be liable to pay Sprint a breakup fee should regulators block the deal, according to sources.
The companies said they expected US regulators would see the benefits of the deal.
