The US mobile market could be about to undergo another round of consolidation, reducing competition from four main companies to just three, with an agreement by T-Mobile to merge with rival Sprint in a deal valued at $26 billion.
The deal was revealed over the weekend, when the two companies announced that they had signed a definitive agreement that would see the Sprint brand disappear and replaced by Deutsche Telekom-owned T-Mobile's.
The companies jsutified the deal by claiming that it would be a "force for positive change" in the US wireless, video and broadband industries, particularly with investment in 5G networks just round the corner.
The merged company will be able to boast around 130 million customers and T-Mobile claimed that it would invest more than $40 billion into 5G development and deployment, post-merger, claiming that it will enable the company to "rapidly create a nationwide 5G network".
On top of that, it suggested that the deal would also result in lower prices and stronger competition for AT&T Mobility and Verizon Wireless, the other two pan-American mobile operators.
As part of the agreement, the merged company will be headquartered in Bellevue, Washington - with a second headquarters planned for Overland Park, Kansas City.
John Legere, current president and chief executive officer of T-Mobile US, will lead the new company. Meanwhile, existing T-Mobile chief operating officer Mike Sievert will be given the same role in the combined firm.
"This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience," said Legere.
"As industry lines blur and we enter the 5G era, consumers and businesses need a company with the disruptive culture and capabilities to force positive change on their behalf."
Marcelo Claure, CEO of Sprint, said that the merger will help accelerate the development of 5G networks in the US and result in more affordable price plans.
"The combination of these two dynamic companies can only benefit the US consumer. Both Sprint and T-Mobile have similar DNA and have eliminated confusing rate plans, converging into one rate plan: Unlimited," he said
"We intend to bring this same competitive disruption as we look to build the world's best 5G network that will make the U.S. a hotbed for innovation and will redefine the way consumers live and work across the US.
"As we do this, we will force our competitors to follow suit, as they always do, which will benefit the entire country. I am confident this combination will spur job creation and ensure opportunities for Sprint employees as part of a larger, stronger combined organisation."
However, the deal will almost certainly attract the attention of antitrust regulators, which could hold up the closure of the deal for many months.
In the UK, a much smaller market, Three's proposal to acquire Telefonica-owned O2, reducing competition from four main companies to just three, was opposed by the regulator Ofcom and eventually blocked by the European Commission, following a volte face over the benefits of market consolidation.
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