T-Mobile, Sprint Now One -- WSJ
April 02 2020 - 3:02AM
Dow Jones News
Closing of $31.8 billion merger marks the end of Sprint as a
brand; Sievert takes the reins
By Drew FitzGerald
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (April 2, 2020).
T-Mobile US Inc. closed its takeover of Sprint Corp. Wednesday
after a nearly two-year battle with federal and state
authorities.
The merger, worth about $31.8 billion based on T-Mobile's
closing stock price Tuesday, marks the end for Sprint as a company
and a brand. The once-thriving network operator spent most of the
past decade losing customers after a string of engineering and
marketing missteps gave the upper hand to rivals, T-Mobile chief
among them.
The combination offers some much-needed closure for T-Mobile
parent Deutsche Telekom AG and Japan's SoftBank Group Corp.,
Sprint's majority shareholder, during a global pandemic that has
tested corporate balance sheets. Deutsche Telekom now holds about
43% of the new U.S. company, while SoftBank has 24%, with the
remainder owned by public shareholders. The Japanese company could
gain a larger stake in the new T-Mobile if its stock hits certain
price targets in the coming years.
The company also accelerated longtime Chief Executive John
Legere's handover of the top job to his deputy, Mike Sievert,
effective immediately. The switch was previously scheduled to occur
May 1. Many of T-Mobile's current executives will remain in charge,
though Sprint leaders including John Saw and Dow Draper will also
hold key posts in the new business.
Like many of its peers, T-Mobile has warned that the coronavirus
crisis in the U.S. could impact its near-term performance. But the
carrier plans to keep upgrading cell towers where possible while
expanding the use of Sprint's wireless radio frequencies to the new
company's roughly 100 million customers.
"We see no changes to our thesis or our long-term aspirations,"
Mr. Sievert said in an interview. He said the new company's greater
size and financial wherewithal would help it create the best 5G
network.
T-Mobile and Sprint tried to merge several times over the past
10 years amid regulatory resistance and disputes over financial
terms. The companies came back to the table and reached a $26
billion all-stock agreement in April 2018.
Company executives said their combined resources would give them
more firepower to pursue fifth-generation, or 5G, wireless
technology, a push that aligned with the Trump administration's
policy priorities. But the merger still faced a drawn-out approval
process at the Federal Communications Commission and Justice
Department.
The Justice Department eventually signed off on the deal with
conditions that armed newcomer Dish Network Corp. with customer
accounts, wireless network infrastructure and other provisions
designed to jump-start the satellite company's entrance into the
cellphone business. The transaction will shift about nine million
prepaid service accounts, most of them under its Boost Mobile
brand, to Dish.
The merger was further delayed by a coalition of state attorneys
general who sued the companies in federal court. The state
officials argued that the Justice Department arrangement wasn't
strong enough to protect customers, who they said would get fewer
choices for wireless service, driving up prices. A federal judge in
February ruled for the companies.
The department's settlement with the wireless companies,
announced last summer, was subject to a separate federal-court
review. On Wednesday, U.S. District Judge Timothy Kelly in
Washington, D.C., approved the settlement, eliminating a final
regulatory uncertainty surrounding the deal.
Another hurdle has come from the California Public Utilities
Commission, a state regulator that typically oversees power
companies and landline phone providers. Sprint on Monday withdrew
its application for CPUC approval, arguing that with no landline
assets left in the state the commission's authority over the deal
was moot. The commission hasn't yet responded to Sprint's
filing.
"We decided to close the transaction now because the stakes are
too high, " Mr. Sievert said, citing some $27 billion of financing
that banks were ready to provide last month in a volatile
market.
--Brent Kendall contributed to this article.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
(END) Dow Jones Newswires
April 02, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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