Sprint, T-Mobile hop on merger-go-round

Summary:A $50 billion deal is reportedly in place. A Sprint-T-Mobile merger would create a stronger No. 3, but risks abound.

Sprint is reportedly nearing a final agreement to acquire T-Mobile in a deal valued at about $50 billion.

According to the Wall Street Journal, Sprint would pay T-Mobile shareholders about $40 a share. T-Mobile closed at $34.28 on Tuesday. The news comes shortly after AT&T announced plans to buy DirecTV.

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AT&T's DirecTV purchase: Get ready for the fallout

If the merger worked out---and regulator scrutiny will be intense---the combination of Sprint and T-Mobile would create a strong No. 3 to compete with Verizon and AT&T. The rub is that the merger would take away T-Mobile, which has been aggressive with its plans and given larger players a few headaches. T-Mobile is probably the biggest threat to Sprint's future

The risks and benefits break down like this:

  • Benefit: Sprint and T-Mobile would have more scale to improve coverage and compete with AT&T and Verizon.
  • Risk: Consumers would lose an option in carriers.
  • Benefit: Sprint and T-Mobile would be able to acquire more spectrum.
  • Risk: Sprint and T-Mobile have different networks and it's unclear the work and timeline involved to combine LTE, GSM and CDMA networks with a dash of WiMax thrown in.
  • Risk: Regulators may not approve a Sprint-T-Mobile deal. The Journal noted that Sprint would pay a $1 billion fee if regulators shot the merger down.

Topics: Networking, Mobility, Telcos

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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