T-Mobile & Sprint Merger: What It Means

What will happen if T-Mobile and Sprint merge into one company?

Side-by-side of the T-Mobile and Sprint logos

T-Mobile and Sprint 

T-Mobile and Sprint, two of the four major wireless carriers, are seeking approval for a merger to combine the two companies into one.

The merge, announced to the public on April 29, 2018, and approved by the Justice Department on July 26, 2019, would make it the second largest carrier after Verizon, with its new combined customer count at over 120 million, and a value of around $146 billion.

Although the deal is said to create new jobs, lower prices, and provide better overall cell coverage, there’s still much speculation over how it will actually play out for customers and employees. Will the merger raise or lower prices? Will more jobs be created with a merge or does combining into one company force some employees out the door?

While those things are definitely an important factor to weigh when it comes to a merger of any two companies, this one is primarily focused on accelerating 5G implementation. Both T-Mobile and Sprint have been on track for a similar release date for 5G, but does uniting into one company mean 5G will come even faster...or slower?

Will Prices Change?

T-Mobile’s CEO says that the merger means current T-Mobile and Sprint customers will pay less than they do right now:

...we plan to offer the same or better rate plans at current or lower prices as those offered by T-Mobile or Sprint – for at least three years after the merger. No catch. No gotchas. Period.

While we're of course not sure if that will actually happen, it makes sense that with an estimated $6 billion in annual cost reductions, and therefore more money in their pockets, they could lower prices for their customers.

T-Mobile also says that the merger will allow for free 5G access through Connecting Heroes Initiative, which is:

a 10-year commitment for FREE 5G access to EVERY first responder at EVERY public and non-profit state and local police, fire and EMS agency across the entire country

T-Mobile Connect is also in the works if the Sprint merger happens. T-Mobile says it will be a prepaid 5G service option available to everyone at just $15 per month.

In fact, if T-Mobile lowers prices even more after the merger, it’s likely that the other two major carriers, AT&T and Verizon, would also start offering service at a lower price. If they want to hold on to their customers while T-Mobile slashes prices, they might just do the same.

What Else Will Happen?

Like with any merging of companies, the T-Mobile and Sprint merger means both companies will have more resources than they did before when they were separate entities. We can expect this to translate to accelerated growth in terms of new devices and coverage, but it might not happen right away.

From a customer’s point of view, it’s likely that not much will change after a merger. After some important behind-the-scenes factors are ironed out, Sprint users will be able to use T-Mobile cell towers and T-Mobile users will be able to reach Sprint towers. This means more coverage and likely little to no change in price (at least not higher prices) for existing customers.

The companies have also said that with the merger, they plan to create thousands of new jobs in America. Some or most of these new employees would presumably be hired in rural areas where they plan to widen their infrastructure.

However, if the two companies do become one, their current, combined cell tower count of 110,000 towers will be reduced to 85,000. This involves building 10,000 new towers and cutting 35,000 towers. At the same time, the company plans to increase its small cell tower count from 10,000 to 50,000.

During that change, it’s unclear how that will affect coverage for existing Sprint and T-Mobile customers since most if not all of the decommissioned towers will be ones Sprint owned.

Another change that will come out of a Sprint and T-Mobile merger involves positioning Dish as the fourth major carrier in the US, essentially taking Sprint's place. According to the Justice Department:

Under the terms of the proposed settlement, T-Mobile and Sprint must divest Sprint’s prepaid business, including Boost Mobile, Virgin Mobile, and Sprint prepaid, to Dish Network Corp. Additionally, T-Mobile and Sprint must make available to Dish at least 20,000 cell sites and hundreds of retail locations. T-Mobile must also provide Dish with robust access to the T-Mobile network for a period of seven years while Dish builds out its own 5G network.

Dish is committed to erecting a 5G network by 2023 that will be available to 70 percent of the US population at download speeds of at least 35 Mbps. In fact, if they don't follow through, they must pay the government a $2.2 billion penalty.

What About 5G?

All four of the nationwide wireless carriers have been racing to put out 5G as quickly as possible, with a release set around 2019 or 2020, at least for major cities in the US.

Let’s say Sprint is on track to release 5G in 2020 and T-Mobile sometime this year. If the two companies pool their resources together in a merge, what one company had will immediately belong to the other one. Of course, it’s easy to then see this as a win for 5G. Maybe they’ll have full, nationwide 5G coverage six months to a year quicker than they could have done it as separate companies.

However, that might not be the case.

Since a merger of this scale will likely involve lots of restructuring when it comes to management and workers, not to mention the fact that the two company’s cell towers probably aren’t exactly set up for a smooth transition—and many of the existing towers will be shut down—5G could be put on hold while other things take precedence.

However, that being said, if 5G is as important to T-Mobile and Sprint as they make it out to be, it’s very possible that their customers could see 5G even faster than Verizon’s or AT&T’s. Just look at this early 2019 filing with the Securities & Exchange Commission, where T-Mobile claims that with Sprint, the two companies could cover nearly 96 percent of rural America by 2024.

With more money, employees, and other resources, and a revamp of their cell towers, it’s not unrealistic to think that the new T-Mobile company could be in the fast lane to 5G and beat out the other two major wireless carriers.