Sprint, T-Mobile considering pre-paid divestment to save merger

16 May 2019

T-Mobile US and Sprint are considering possible concessions to salvage their stuttering USD26 billion merger, people familiar with the situation have informed Bloomberg. The preferred option being discussed by the two cellcos is understood to be the separation and potential sale of their respective pre-paid businesses, said the sources, who asked not to be identified because the deliberations are private. Other options, such as selling surplus spectrum licences or setting up a new fourth carrier through a network-leasing arrangement, are considered far less attractive, the sources added.

In the pre-paid space, T-Mobile operates Metro by T-Mobile (formerly Metro PCS), while Sprint owns Virgin Mobile USA and Boost Mobile. In September 2018 T-Mobile CEO John Legere claimed that Metro had doubled its user base since being acquired in May 2013, suggesting it has around 18 million users, compared to 8.995 million in March 2013.

As previously reported by TeleGeography’s CommsUpdate, in April 2018 T-Mobile and Sprint entered into a definitive agreement to merge in an all-stock transaction. They seek to create a company which will be 41.7% owned by T-Mobile’s parent Deutsche Telekom (DT, which would have overall control) and 27.4% owned by Sprint parent SoftBank Group Corp, with the remaining 30.9% in free float. The long-running merger continues to face opposition from the Department of Justice (DoJ) and some state antitrust officials.