Telecoms: T-Mobile and Sprint have announced a merger in the USA

This assembly, dating back to October 30, 2017 shows pictures of the logos of T-Mobile (April 24, 2017) and Sprint (December 31, 2014) (Photo JUSTIN SULLIVAN, SAUL LOEB. GETTY IMAGES NORTH AMERICA)

The groups telecom T-Mobile and Sprint have announced Sunday it has reached an agreement to merge the United States to create a new group able to develop a mobile network 5G, which is vital for new applications of the internet.

This announcement puts an end to long months, even years, of speculation over a reconciliation between the two groups, the 3rd and 4th telecommunications operators in the United States. They will be approximately 127 million subscribers to their various services in the United States, of which approximately $ 100 million in mobile only, and compete with the industry giants that are Verizon (NYSE:VZ) and AT&T.

But this approximation may encounter the opposition of the competition authorities, who will probably ask that some activities are assigned to give their agreement. The ministry of Justice is thus opposed to the merger between AT&T and the media group Time Warner and has filed a lawsuit, which is currently taking place, to try to block it.

In a press release, the two groups have stressed that their merger will accelerate their development in the field of 5G, the ultra-fast internet become essential with the generalization of the connected objects and the progress in the field of artificial intelligence.

“The company will bear the name of T-Mobile will be a dominant player in the sector of mobile telephony, video and broadband internet in the United States,” says the joint communiqué, stressing that the synergies resulting from the merger are expected to total $ 6 billion.

In a conference call after the announcement of the transaction, the leaders of both groups have stated that the passage of the 4G to the 5G, was equivalent to that of the black and white television to the color in the 1960s.

The boss of T-Mobile Usa, John Legere, will lead the new entity and the head office will be shared between Overland Park, Kansas, center), Sprint, and Bellevue (Washington, northwestern), that of T-Mobile.

Promises of jobs –

This merger also represents a new “hit” for Masayoshi Son, the CEO of the group, the japanese telecom Softbank (T:9984), the majority shareholder of Sprint, which effectively multiplies the investment in the sector of new technologies and the internet. T-Mobile is for its part controlled by the German group Deutsche Telekom (DE:DTEGn).

The new entity will be controlled up to 42% by Deutsche Telekom ag, 27% by Softbank, the rest is on the market.

When he had acquired Sprint in 2013, Masayoshi Sound had already attempted to unite the two groups. He was then confronted to the hostility of the authorities of the competition and had abandoned the idea. The election to the White House from republican candidate Donald Trump, who had promised an easing of regulations, however, had revived the discussion but as a new attempt, last November, had failed.

Mr. His — who was received in December 2016, by Donald Trump, just after his election and before he even takes office — had promised to invest $ 50 billion in the United States, and to create 50,000 jobs, including in start-ups in the technology sector.

On Sunday, the two groups have indicated that they will employ more than 200,000 people in the United States after their merger, and that their efforts to develop a network 5G would be generators of jobs.

The operation will be done on the basis of an exchange of securities (9,75 securities of Sprint for each title T-Mobile) and gives Sprint a total value of $ 59 billion and $ 146 billion to the new entity in which the stranded debt will be close to $ 60 billion.

On the basis of the closing price of Sprint on Friday (6,50 dollars), its market capitalization of $ 26 billion, and that of T-Mobile, who had finished the session at 64,52 $ 56.1 billion. Sprint, however, had increased sharply during Friday’s session (+8,33%) after several american media had reported the imminence of a merger.

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