Sprint - T-Mobile Merger News: Revised Deal Reported Close

Sprint Corp. and T-Mobile, the third and fourth largest U.S. mobile carriers, reportedly were close to agreement Thursday on new terms for a merger that would boost T-Mobile parent Deutsche Telekom AG with 43% of the new entity.

The Wall Street Journal reported the companies are trying to avoid changes that would prompt another shareholder vote and hoped to close the deal as early as April 1.

In addition to its ownership percentage, the deal gives Deutsche Telekom (DTE.DE), Europe’s largest mobile operator, a 67% voting stake and control of the board.

Sprint (S) closed fractionally lower Thursday; T-Mobile (TMUS) shares were off nearly a point.

A federal judge last week dismissed a suit filed by a group of state attorneys general trying to block the deal amid antitrust concerns.

The original agreement provided for a share exchange rate of 9.75 Sprint shares for one share of T-Mobile stock. The plan would have left Sprint parent SoftBank Group Corp. with a 27% stake in the new company with the remaining 31% to be held by the public. SoftBank currently holds 80% of Sprint common stock. The new deal would boost Deutsche Telekom’s stake from 42% to 43%.

The merger is expected to place the new T-Mobile in a better position to compete with mobile giants AT&T (T) and Verizon (VZ) as the industry develops 5G networks that will expand market opportunities beyond consumer mobile broadband to fixed wireless access for the in-home market as well as applications for smart devices like self-driving vehicles.

Tests indicate, however, developing 5G networks still are not ready for prime time. A series of tests conducted by OpenSignal indicated Verizon leading its competitors on speed, but testers were able to connect only 6% of the time.

Deutsche Telekom CEO Tim Hoettges told CNBC he is determined to bring the new T-Mobile’s market value more in line with its competitors’. The merged entity will have a value of about $120 million, compared to $274 billion for AT&T and $242 billion for Verizon.

“We are very close to getting the merger between Sprint and T-Mobile done and then we are becoming the No. 1 in U.S.,” he said. “That is our attempt, challenging AT&T and Verizon.”

He added: “We’re going to build the best 5G network. We’re going to have double the amount of spectrum so we can be very aggressive on pricing.”