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Closing of $31.8 billion merger marks the end of Sprint as a brand; Sievert takes the reins
By Drew FitzGerald
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 2, 2020).
T-Mobile US Inc. closed its takeover of Sprint Corp. Wednesday after a nearly two-year battle with federal and state authorities.
The merger, worth about $31.8 billion based on T-Mobile's closing stock price Tuesday, marks the end for Sprint as a company and a brand. The once-thriving network operator spent most of the past decade losing customers after a string of engineering and marketing missteps gave the upper hand to rivals, T-Mobile chief among them.
The combination offers some much-needed closure for T-Mobile parent Deutsche Telekom AG and Japan's SoftBank Group Corp., Sprint's majority shareholder, during a global pandemic that has tested corporate balance sheets. Deutsche Telekom now holds about 43% of the new U.S. company, while SoftBank has 24%, with the remainder owned by public shareholders. The Japanese company could gain a larger stake in the new T-Mobile if its stock hits certain price targets in the coming years.
The company also accelerated longtime Chief Executive John Legere's handover of the top job to his deputy, Mike Sievert, effective immediately. The switch was previously scheduled to occur May 1. Many of T-Mobile's current executives will remain in charge, though Sprint leaders including John Saw and Dow Draper will also hold key posts in the new business.
Like many of its peers, T-Mobile has warned that the coronavirus crisis in the U.S. could impact its near-term performance. But the carrier plans to keep upgrading cell towers where possible while expanding the use of Sprint's wireless radio frequencies to the new company's roughly 100 million customers.
"We see no changes to our thesis or our long-term aspirations," Mr. Sievert said in an interview. He said the new company's greater size and financial wherewithal would help it create the best 5G network.
T-Mobile and Sprint tried to merge several times over the past 10 years amid regulatory resistance and disputes over financial terms. The companies came back to the table and reached a $26 billion all-stock agreement in April 2018.
Company executives said their combined resources would give them more firepower to pursue fifth-generation, or 5G, wireless technology, a push that aligned with the Trump administration's policy priorities. But the merger still faced a drawn-out approval process at the Federal Communications Commission and Justice Department.
The Justice Department eventually signed off on the deal with conditions that armed newcomer Dish Network Corp. with customer accounts, wireless network infrastructure and other provisions designed to jump-start the satellite company's entrance into the cellphone business. The transaction will shift about nine million prepaid service accounts, most of them under its Boost Mobile brand, to Dish.
The merger was further delayed by a coalition of state attorneys general who sued the companies in federal court. The state officials argued that the Justice Department arrangement wasn't strong enough to protect customers, who they said would get fewer choices for wireless service, driving up prices. A federal judge in February ruled for the companies.
The department's settlement with the wireless companies, announced last summer, was subject to a separate federal-court review. On Wednesday, U.S. District Judge Timothy Kelly in Washington, D.C., approved the settlement, eliminating a final regulatory uncertainty surrounding the deal.
Another hurdle has come from the California Public Utilities Commission, a state regulator that typically oversees power companies and landline phone providers. Sprint on Monday withdrew its application for CPUC approval, arguing that with no landline assets left in the state the commission's authority over the deal was moot. The commission hasn't yet responded to Sprint's filing.
"We decided to close the transaction now because the stakes are too high, " Mr. Sievert said, citing some $27 billion of financing that banks were ready to provide last month in a volatile market.
--Brent Kendall contributed to this article.
Write to Drew FitzGerald at email@example.com
(END) Dow Jones Newswires
April 02, 2020 02:47 ET (06:47 GMT)
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