Sprint Buys T-Mobile for $32 Billion, So America May Be Saying Goodbye to "the Uncarrier"
This week in giant mergers, Sprint plans to buy T-Mobile for $32 billion, a whopping sum, according to reporting from The New York Times, Bloomberg and The Wall Street Journal. The deal is in the preliminary stages, but it would create a conglomerate that could perhaps challenge the might of Verizon and AT&T, the U.S.'s most powerful cellular phone companies against which T-Mobile and Sprint currently compete.
That means you can start saying your tearful goodbyes to T-Mobile in the U.S. Under the terms of the deal the cell phone company would disappear stateside, bringing its bright color scheme and aggressive customer-stealing deals along with it. That could happen as early as July, the Times said.
Under the terms of the deal, which hasn't been made public, Sprint would pay T-Mobile about $40 a share for T-Mobile, according to the Journal. Pretty much everybody reported that the deal merging the two big companies would face some strict scrutiny and challenges from regulatory bodies in the U.S. But Verizon and AT&T currently have by far the most wireless customers.
T-Mobile has spent the last few months pushing a really aggressive marketing plan to pay off AT&T and Verizon wireless customers' Early Termination Fees (ETFs), which are common in the U.S. but aren't really used anywhere else. That's because AT&T and Verizon are primarily contract carriers, where you sign away two years of your cell phone loyalty in exchange for getting a big rebate on your phone.
Overseas, people are more likely to pay up-front for a phone and never sign a contract, resulting in lower monthly fees.
T-Mobile's aggressive ETF deal meant it signed up more subscribers in the first quarter of 2014 than AT&T and Verizon combined, according to Fierce Wireless.
T-Mobile CEO John Legere's been hinting at a merger to what he's called the AT&T/Verizon "duopoly" since at least January of this year, according to Bloomberg.
We all need better scale and capability. The question starts to be: How do you take the maverick and supercharge it? We either need more spectrum and capability and a lot more investment, or we need consolidation.
Looks like they went with the latter.