Creates Only Company with Network Capacity
Needed to Rapidly Launch Nationwide 5G Network with Breadth and
Depth Critical to Extend U.S. Global Internet Leadership in the 5G
Era
Supercharges the Un-carrier Strategy to Deliver
Lower Prices, Unmatched Value, and Greater Competition in Wireless,
Video, and Broadband
Combination Will Create Thousands of American
Jobs and Boost U.S. Economic Growth with Planned $40 Billion
Investment in its Business and Next-Generation 5G Network
John Legere to Serve as Chief Executive Officer
and Mike Sievert to Serve as President and Chief Operating Officer
of the Combined Company
T-Mobile US (NASDAQ: TMUS) and Sprint Corporation (NYSE: S)
today announced they have entered into a definitive agreement to
merge in an all-stock transaction 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. Based on closing
share prices on April 27, this represents a total implied
enterprise value of approximately $59 billion for Sprint and
approximately $146 billion for the combined company. The new
company will have a strong closing balance sheet and a fully funded
business plan with a strong foundation of secured investment grade
debt at close.
The combined company will be named T-Mobile, and it will be a
force for positive change in the U.S. wireless, video, and
broadband industries. The combination of spectrum holdings,
resulting network scale, and expected run rate cost synergies of
$6+ billion, representing a net present value (NPV) of $43+ billion
will supercharge T-Mobile’s Un-carrier strategy to disrupt the
marketplace and lay the foundation for U.S. companies and
innovators to lead in the 5G era.
The New T-Mobile will have the network capacity to rapidly
create a nationwide 5G network with the breadth and depth needed to
enable U.S. firms and entrepreneurs to continue to lead the world
in the coming 5G era, as U.S. companies did in 4G. The new company
will be able to light up a broad and deep 5G network faster than
either company could separately. T-Mobile deployed nationwide LTE
twice as fast as Verizon and three times faster than AT&T, and
the combined company is positioned to do the same in 5G with deep
spectrum assets and network capacity.
The combined company will have lower costs, greater economies of
scale, and the resources to provide U.S. consumers and businesses
with lower prices, better quality, unmatched value, and greater
competition. The New T-Mobile will employ more people than both
companies separately and create thousands of new American jobs.
Following closing, the new company will be headquartered in
Bellevue, Wash., with a second headquarters in Overland Park, Kan.
John Legere, current President and Chief Executive Officer of
T-Mobile US and the creator of T-Mobile’s successful Un-carrier
strategy, will serve as Chief Executive Officer, and Mike Sievert,
current Chief Operating Officer of T-Mobile, will serve as
President and Chief Operating Officer of the combined company. The
remaining members of the new management team will be selected from
both companies during the closing period. Tim H�ttges, current
T-Mobile US Chairman of the Board, will serve as Chairman of the
Board for the new company. Masayoshi Son, current SoftBank Group
Chairman and CEO, and Marcelo Claure, current Chief Executive
Officer of Sprint, will serve on the board of the new company.
“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 – and do it all so much faster than either company could
on its own,” said John 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.”
“The combination of these two dynamic companies can only benefit
the U.S. consumer. Both Sprint and T-Mobile have similar DNA and
have eliminated confusing rate plans, converging into one rate
plan: Unlimited,” said Marcelo Claure. “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 U.S., including
in rural America. 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 organization, and I am thrilled that Kansas City
will be a second headquarters for the merged company.”
Creating #5GforAll – the Only Broad and Deep 5G Nationwide
Network
It is critically important that America and American companies
lead in the 5G era. Early U.S. leadership in 4G fueled a wave of
American innovation and entrepreneurship that gave rise to today’s
global mobile Internet leaders, creating billions in economic value
and job growth. America’s early 4G leadership is credited with
creating 1.5 million jobs and adding billions to the U.S. GDP. With
5G, the stakes are even higher – because 5G will be even more
transformational.
Only the combined company will have the network capacity
required to quickly create a broad and deep 5G nationwide network
in the critical first years of the 5G innovation cycle – the years
that will determine if American firms lead or follow in the 5G
digital economy. With Sprint’s expansive 2.5 GHz spectrum,
T-Mobile’s nationwide 600 MHz spectrum, and other combined assets,
the New T-Mobile plans to create the highest capacity mobile
network in U.S. history. Compared to T-Mobile’s network today, the
combined company’s network is expected to deliver 15x faster speeds
on average nationwide by 2024, with many customers experiencing up
to 100x faster speeds than early 4G.
Neither company standing alone can create a nationwide 5G
network with the breadth and depth required to fuel the next wave
of mobile Internet innovation in the U.S. and answer competitive
challenges from abroad.
Neither can AT&T and Verizon in the near term, even though
they will still respectively own 34% and 172% more spectrum than
the combined company. Even with their vast resources, AT&T and
Verizon cannot rapidly build nationwide 5G and their planned 5G
networks will only be available sporadically in just a handful of
very limited areas. To build nationwide 5G, they either have to
kick current customers off LTE, which would take years, or use a
type of spectrum (millimeter wave) that can only carry a signal
2,000 feet from a cell site – versus multiple miles for other
spectrum – making it nearly impossible for either of them to create
a truly nationwide 5G network quickly.
Ubiquitous high-speed 5G service and Internet of Things (“IoT”)
capabilities will ignite innovation across industries and create
the conditions for U.S. firms and innovators to lead the globe in
the 5G era.
“Going from 4G to 5G is like going from black and white to color
TV,” added Claure. “It’s a seismic shift – one that only the
combined company can unlock nationwide to fuel the next wave of
mobile innovation.”
5G for All will unleash incredible benefits and capabilities for
consumers and businesses. Imagine, for example, augmented reality
heads-up displays that see everything you do, and provide real-time
cloud-driven information about the people and objects around you.
Imagine never losing anything again because low-cost sensors with
decade long battery life are embedded in everything you own.
Imagine an earpiece providing real-time translation as a friend
speaks to you in another language. Imagine environmental sensors in
infrastructure and for agriculture having a profound impact on
productivity.
Shifting the Un-carrier Strategy Into Overdrive – Reducing
Prices and Driving More Competition
The new company expects prices to drop as competition heats up.
The New T-Mobile will have lower costs, greater economies of scale,
and unprecedented network capacity – a winning combination that
should make wireless, and adjacent industries like cable and
broadband, more affordable for everyone.
The combination will dramatically accelerate T-Mobile’s
successful Un-carrier strategy, which is built around listening to
customers and solving their pain points. It will also leverage
Sprint’s incredible spectrum assets and strong DNA.
The deal will create more competition and unmatched value for
customers across the country. And, existing T-Mobile and Sprint
customers will benefit from increased speeds, coverage, and
performance as the two companies’ networks combine.
Wireless, broadband, and video markets are rapidly converging.
AT&T is now the largest TV provider in the country. Comcast
added more wireless phone customers last year than AT&T and
Verizon combined, and Charter is launching wireless this year. And,
more than 1 in 10 Americans (12%) use wireless as their only
Internet or broadband connection, freeing themselves from the grip
of the traditional, uncompetitive in-home broadband providers.
“This isn’t a case of going from 4 to 3 wireless companies –
there are now at least 7 or 8 big competitors in this converging
market. And in 5G, we’ll go from 0 to 1. Only the New T-Mobile will
have the capacity to deliver real, nationwide 5G,” added Legere.
“We’re confident that, once regulators see the compelling benefits,
they’ll agree this is the right move at the right time for
consumers and the country.”
In this rapidly converging marketplace, the new company will
bring more choice and competition – for all consumers, including
three key underserved areas:
- Rural communities. Rural Americans
seldom have a choice of more than one or two wireless, broadband,
or cable providers. The New T-Mobile will end that with increased
reach and plans to open hundreds of new stores in rural
communities, creating thousands of new jobs. Millions of Americans
in rural communities will have more choice and competition, where
they may have none today.
- Broadband. 51% of Americans have only
one high-speed broadband option – no choice at all! The combined
company will create a viable alternative for millions by enabling
mobile connections that rival broadband, driving prices lower and
improving service.
- Business and government wireless
services. Today, Verizon and AT&T dominate this category with
4x more customers than Sprint and T-Mobile added together. With its
assets and capabilities, the new company will unlock real
competition for business and government customers.
Driving Significant U.S. Job Growth
From the first day Sprint and T-Mobile combine and every year
thereafter, the new company will employ more people in the U.S.
than both companies would separately. More than 200,000 people will
work on behalf of the combined company in the U.S. at the
start.
And, the New T-Mobile plans to invest up to $40 billion in its
new network and business in the first three years alone, a massive
capital outlay that will fuel job growth at the new company and
across related sectors. This is 46% more than T-Mobile and Sprint
spent combined in the past three years.
This combination will also force AT&T, Charter, Comcast,
Verizon, and others to make investments of their own to compete,
driving billions more in accelerated investment.
Five years ago, T-Mobile merged with MetroPCS to compete in the
4G era – a transaction that has resulted in substantial job growth.
Three times the number of people work on MetroPCS today compared to
the time of the acquisition in 2013. With that track record, the
New T-Mobile will accelerate long-term economic stimulus for the
U.S. in the 5G era -- ultimately leading to the creation of
thousands of American jobs and supporting business opportunities
for the U.S. economy.
5G is expected to create 3 million new U.S. jobs and $500
billion in economic growth by 2024, according to a report from
CTIA, and the combined company will be a catalyst in driving that
massive economic stimulus.
Transaction Details and Financial Profile
The new company expects to create substantial value for T-Mobile
and Sprint shareholders through an expected $6+ billion in run rate
cost synergies, representing a net present value (NPV) of $43+
billion, net of expected costs to achieve such cost synergies. This
transaction will also enhance the financial position of the
combined company. Highlights include:
- Pro Forma 2018E Service Revenue 1 of
$53-57 billion
- Pro Forma 2018E Adjusted EBITDA1,2 of
$22-23 billion
- Pro Forma 2018E Adjusted EBITDA1,2
Margin of 40-42% with a longer-term target of 54-57%
- Pro Forma 2018E Net Debt3 of $63-65
billion with a streamlined single-silo corporate debt
structure
- Fully funded business plan with
significant liquidity at close
The Boards of Directors of T-Mobile and Sprint have approved the
transaction. Deutsche Telekom and SoftBank Group are expected to
hold approximately 42% and 27% of diluted economic ownership of the
combined company, respectively, with the remaining approximately
31% held by the public. The Board will consist of 14 directors, 9
nominated by Deutsche Telekom and 4 nominated by SoftBank Group,
including Masayoshi Son, Chairman and CEO of SoftBank Group, and
Marcelo Claure, CEO of Sprint. John Legere, CEO of the New
T-Mobile, will also serve as a director. Upon consummation of the
transaction, the combined company is expected to trade under the
(TMUS) symbol on the NASDAQ.
The new company will have some of the most iconic brands in
wireless – T-Mobile, Sprint, MetroPCS, Boost Mobile, Virgin Mobile
– and will determine brand strategy after the transaction
closes.
The transaction is subject to customary closing conditions,
including regulatory approvals. The transaction is expected to
close no later than the first half of 2019.
Advisors
PJT Partners is acting as financial advisor to T-Mobile and
rendered a fairness opinion to its Board of Directors. Goldman
Sachs is acting as financial advisor to Deutsche Telekom and
T-Mobile and rendered a fairness opinion to the T-Mobile Board of
Directors. Deutsche Bank also acted as financial advisor to
T-Mobile. Wachtell, Lipton, Rosen & Katz is providing legal
counsel to T-Mobile and Deutsche Telekom, with Cleary Gottlieb and
DLA Piper serving as regulatory counsel. Evercore is acting as
financial advisor to a committee of independent directors of
T-Mobile and rendered a fairness opinion, and Latham & Watkins
is providing legal counsel to the committee of independent
directors. Richards, Layton and Finger is serving as Delaware
Counsel. Morgan Stanley served as financial advisor to Deutsche
Telekom. Barclays, Credit Suisse, Deutsche Bank, Goldman
Sachs, Morgan Stanley, and RBC are providing T-Mobile with
committed debt financing to support the transaction, and PJT
Partners is advising T-Mobile on the debt financing associated with
the transaction.
The Raine Group LLC is acting as lead financial
advisor to Sprint. J.P. Morgan is also acting as a financial
advisor to Sprint. Centerview Partners LLC is acting as
financial advisor to the Independent Transaction Committee of the
Board of Directors of Sprint. The Raine Group LLC, J.P. Morgan and
Centerview Partners LLC each rendered fairness opinions to the
Board of Directors of Sprint. Morrison &
Foerster LLP is lead legal counsel to Sprint
and for SoftBank Group. Goodwin Procter LLP is legal counsel to the
Independent Transaction Committee of the Board of Directors of
Sprint. Skadden, Arps, Slate, Meagher & Flom LLP is regulatory
co-counsel and Potter Anderson Corroon LLP is Delaware
Counsel. Mizuho Securities Co., Ltd. and SMBC Nikko
Securities Inc. are acting as financial advisors
to SoftBank Group.
Conference Call / Webcast Information
T-Mobile and Sprint will host a conference call for investors
and media at 12:30 PM Eastern Time today (9:30 AM Pacific Time) to
discuss this announcement.
A live audio webcast of the call can be accessed at
www.Allfor5G.com. To submit questions via Twitter, send a tweet to
@JohnLegere, @MarceloClaure, @TMobile, or @Sprint using #5GforAll.
Investors and media can access the teleconference by calling
888-599-8685 (U.S. Toll Free) or +1 323-794-2415 (International).
The access code for the call is 894223.
The conference call will be available for replay and can be
accessed from www.Allfor5G.com or by dialing 888-203-1112 (U.S.
Toll Free) or +1 719-457-0820 (International). The access code for
the replay is 8152135.
About T-Mobile
As America's Un-carrier, T-Mobile US, Inc. (NASDAQ: TMUS) is
redefining the way consumers and businesses buy wireless services
through leading product and service innovation. Our advanced
nationwide 4G LTE network delivers outstanding wireless experiences
to 72.6 million customers who are unwilling to compromise on
quality and value. Based in Bellevue, Washington, T-Mobile US
provides services through its subsidiaries and operates its
flagship brands, T-Mobile and MetroPCS. For more information,
please visit http://www.t-mobile.com.
About Sprint
Sprint (NYSE: S) is a communications services company
that creates more and better ways to connect its customers to
the things they care about most. Sprint served 54.6 million
connections as of Dec. 31, 2017, and is widely recognized for
developing, engineering and deploying innovative technologies,
including the first wireless 4G service from a national carrier
in the United States; leading no-contract brands including
Virgin Mobile USA, Boost Mobile, and Assurance Wireless;
instant national and international push-to-talk capabilities; and a
global Tier 1 Internet backbone. Today, Sprint’s legacy of
innovation and service continues with an increased investment to
dramatically improve coverage, reliability and speed across its
nationwide network and commitment to launching the
first 5G mobile network in the U.S. You can learn
more and visit Sprint
at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.
1 Proforma service revenue and Adjusted EBITDA measures do not
include the impacts of ASC606 revenue recognition accounting
changes.
2 T-Mobile is not able to forecast net income on a forward
looking basis without unreasonable efforts due to the high
variability and difficulty in predicting certain items that affect
GAAP net income including, but not limited to, income tax expense,
stock based compensation expense and interest expense. Adjusted
EBITDA should not be used to predict net income as the difference
between the two measures is variable.
3 Proforma net debt reflects total expected debt (excluding
tower obligations, premiums, discounts and issuance costs) less
cash and cash equivalents.
Important Additional Information
In connection with the proposed transaction, T-Mobile US, Inc.
(“T-Mobile”) will file a registration statement on Form S-4, which
will contain a joint consent solicitation statement of T-Mobile and
Sprint Corporation (“Sprint”), that also constitutes a prospectus
of T-Mobile (the “joint consent solicitation
statement/prospectus”), and each party will file other documents
regarding the proposed transaction with the U.S. Securities and
Exchange Commission (the “SEC”). INVESTORS AND SECURITY HOLDERS ARE
URGED TO READ THE JOINT CONSENT SOLICITATION STATEMENT/PROSPECTUS
AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. When
final, a definitive copy of the joint consent solicitation
statement/prospectus will be sent to T-Mobile and Sprint
stockholders. Investors and security holders will be able to obtain
the registration statement and the joint consent solicitation
statement/prospectus free of charge from the SEC’s website or from
T-Mobile or Sprint. The documents filed by T-Mobile with the SEC
may be obtained free of charge at T-Mobile’s website, at
www.t-mobile.com, or at the SEC’s website, at www.sec.gov. These
documents may also be obtained free of charge from T-Mobile by
requesting them by mail at T-Mobile US, Inc., Investor Relations, 1
Park Avenue, 14th Floor, New York, NY 10016, or by telephone at
212-358-3210. The documents filed by Sprint with the SEC may be
obtained free of charge at Sprint’s website, at www.sprint.com, or
at the SEC’s website, at www.sec.gov. These documents may also be
obtained free of charge from Sprint by requesting them by mail at
Sprint Corporation, Shareholder Relations, 6200 Sprint Parkway,
Mailstop KSOPHF0302-3B679, Overland Park, Kansas 66251, or by
telephone at 913-794-1091.
Participants in the Solicitation
T-Mobile and Sprint and their respective directors and executive
officers and other members of management and employees may be
deemed to be participants in the solicitation of consents in
respect of the proposed transaction. Information about T-Mobile’s
directors and executive officers is available in T-Mobile’s proxy
statement dated April 26, 2018, for its 2018 Annual Meeting of
Stockholders. Information about Sprint’s directors and executive
officers is available in Sprint’s proxy statement dated June 19,
2017, for its 2017 Annual Meeting of Stockholders, and in Sprint’s
subsequent reports on Form 8-K filed with the SEC on January 4,
2018 and January 17, 2018. Other information regarding the
participants in the consent solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the joint consent solicitation
statement/prospectus and other relevant materials to be filed with
the SEC regarding the acquisition when they become available.
Investors should read the joint consent solicitation
statement/prospectus carefully when it becomes available before
making any voting or investment decisions. You may obtain free
copies of these documents from T-Mobile or Sprint as indicated
above.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
Cautionary Statement Regarding Forward-Looking
Statements
This communication contains certain forward-looking statements
concerning T-Mobile, Sprint and the proposed transaction between
T-Mobile and Sprint. All statements other than statements of fact,
including information concerning future results, are
forward-looking statements. These forward-looking statements are
generally identified by the words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “may,” “could” or similar
expressions. Such forward-looking statements include, but are not
limited to, statements about the benefits of the proposed
transaction, including anticipated future financial and operating
results, synergies, accretion and growth rates, T-Mobile’s,
Sprint’s and the combined company’s plans, objectives, expectations
and intentions, and the expected timing of completion of the
proposed transaction. There are several factors which could cause
actual plans and results to differ materially from those expressed
or implied in forward-looking statements. Such factors include, but
are not limited to, the failure to obtain, or delays in obtaining,
required regulatory approvals, and the risk that such approvals may
result in the imposition of conditions that could adversely affect
the combined company or the expected benefits of the proposed
transaction, or the failure to satisfy any of the other conditions
to the proposed transaction on a timely basis or at all; the
occurrence of events that may give rise to a right of one or both
of the parties to terminate the business combination agreement;
adverse effects on the market price of T-Mobile’s or Sprint’s
common stock and on T-Mobile’s or Sprint’s operating results
because of a failure to complete the proposed transaction in the
anticipated timeframe or at all; inability to obtain the financing
contemplated to be obtained in connection with the proposed
transaction on the expected terms or timing or at all; the ability
of T-Mobile, Sprint and the combined company to make payments on
debt or to repay existing or future indebtedness when due or to
comply with the covenants contained therein; adverse changes in the
ratings of T-Mobile’s or Sprint’s debt securities or adverse
conditions in the credit markets; negative effects of the
announcement, pendency or consummation of the transaction on the
market price of T-Mobile’s or Sprint’s common stock and on
T-Mobile’s or Sprint’s operating results, including as a result of
changes in key customer, supplier, employee or other business
relationships; significant transaction costs, including financing
costs, and unknown liabilities; failure to realize the expected
benefits and synergies of the proposed transaction in the expected
timeframes or at all; costs or difficulties related to the
integration of Sprint’s network and operations into T-Mobile; the
risk of litigation or regulatory actions; the inability of
T-Mobile, Sprint or the combined company to retain and hire key
personnel; the risk that certain contractual restrictions contained
in the business combination agreement during the pendency of the
proposed transaction could adversely affect T-Mobile’s or Sprint’s
ability to pursue business opportunities or strategic transactions;
effects of changes in the regulatory environment in which T-Mobile
and Sprint operate; changes in global, political, economic,
business, competitive and market conditions; changes in tax and
other laws and regulations; and other risks and uncertainties
detailed in T-Mobile’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2017 and in its subsequent reports on Form
10-Q, including in the sections thereof captioned “Risk Factors”
and “Cautionary Statement Regarding Forward-Looking Statements,” as
well as in its subsequent reports on Form 8-K, all of which are
filed with the SEC and available at www.sec.gov and
www.t-mobile.com, and in Sprint’s Annual Report on Form 10-K for
the fiscal year ended March 31, 2017 and in its subsequent reports
on Form 10-Q, including in the sections thereof captioned “Risk
Factors” and “MD&A — Forward-Looking Statements,” as well as in
its subsequent reports on Form 8-K, all of which are filed with the
SEC and available at www.sec.gov and www.sprint.com.
Forward-looking statements are based on current expectations and
assumptions, which are subject to risks and uncertainties that may
cause actual results to differ materially from those expressed in
or implied by such forward-looking statements. Given these risks
and uncertainties, persons reading this communication are cautioned
not to place undue reliance on such forward-looking statements.
T-Mobile and Sprint assume no obligation to update or revise the
information contained in this communication (whether as a result of
new information, future events or otherwise), except as required by
applicable law.
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