2018.04.2921:29:00UTC+00T-Mobile to Acquire Sprint in $26 Billion Deal

T-Mobile U.S. Inc. and Sprint Corp said they had reached an agreement for a $26 billion all-stock deal and are confident they could secure approval from regulators because the merger would generate thousands of jobs and help the U.S. surpass China to creating the next generation mobile network.

The implied equity valuation for Sprint is $6.62 per share based on T-Mobile's closing share price on Friday. Sprint shares closed on Friday at $6.50. The all-stock transaction is at a fixed exchange ratio of 0.10256. T-Mobile shares for each Sprint share, or the equivalent of 9.75 Sprint shares for each T-Mobile US share.

The deal ended four years of talks between the third and fourth biggest U.S. wireless carriers, setting the stage for the establishment of an entity with 127 million customers that will be a formidable rival to the top two wireless companies, Verizon Communications Inc. and AT&T Inc.

U.S. regulators are expected to give a hard line of questioning to Sprint and T-Mobile on how they will value their combined wireless offerings.

The new deal will create the highest-paid capacity U.S. network, lower prices, create jobs, and improve service in rural areas, according to T-Mobile CEO John Legere, and the new leader of the proposed combined entity.

The merged firm, which will be called T-Mobile, will invest $40 billion over the next 30 years to upgrade its networks to accommodate the next generation 5G wireless technology, which is anticipated to have the speeds needed to power drones and automated cars.

In a conference call to analysts, the companies said that the U.S. recent tax overhaul would have a positive impact, and the combined firm would not be a significant taxpayer until 2025.