INSUBCONTINENT EXCLUSIVE:
love lost between Sprint Corp.'s Marcelo Claure and T-Mobile's John Legere, a pair of chief executives who sniped at each other incessantly
-- on Twitter, at public events, even in ads
But behind the scenes, the two telecom moguls were bonding around a common cause.The fruits of that relationship became apparent this
weekend, when T-Mobile US Inc
agreed to acquire Sprint Corp
Just months after a previous attempt collapsed under regulatory concerns, Legere and Claure have again driven the No
4 American carriers together, realizing neither alone can outgun Verizon Communications Inc
in the coming era of blazing-fast fifth-generation wireless.The deal follows years of back and forth between Deutsche Telekom AG, the German
company that controls T-Mobile, and SoftBank Group Corp., Sprint's Japanese owner
But it was only in the past month or so that Claure really intensified his lobbying, calling SoftBank Chairman Masayoshi Son several times a
week to reinforce the urgency of an alliance to take on the industry leaders, according to people familiar with the matter
Legere, meanwhile, worked on convincing Deutsche to come back to the table, the people said, asking not to be identified discussing the
details.The question now is whether antitrust enforcers will go along with the deal
They sent shares of Sprint down 13 percent to $5.63 on Monday, an unusual outcome for a company that just signed a takeover agreement
T-Mobile also dropped, declining as much as 5.9 percent to $60.72.Legere said he was confident the transaction will be approved and that he
has some convincing to do in Washington
"This magenta T-shirt and these sneakers are going to be in the White House, in the DOJ this week," Legere said on CNBC, outlining his plans
to defend the deal and impress lawmakers that the combination will stimulate investment on new networks.China is now racing ahead on 5G
research and investment and the sense was that the Trump administration, distrustful of the Asian power, would be more inclined to
green-light a deal than its predecessor, the people said
The market dynamics were also changing: Comcast Corp
was steadily gaining broadband users while other cable operators hovered on the margins
With Legere on board -- the two CEOs had begun meeting in person and speaking regularly by phone -- the scene was set for the largest
telecom merger in years."We share a common vision on how the network will be built and we realized we need each other to be
mega-successful,'' Claure said in an interview over the weekend
"We can't build a 5G network without T-Mobile and T-Mobile can't build it without Sprint."Sprint-T-Mobile Deal Faces Tough Path Through
Trump's WashingtonThe new corporation certainly carries a lot more financial heft -- crucial if it's to remain competitive in costly 5G
infrastructure development
Operating as T-Mobile, it would have about $74 billion in annual revenue and 70 million wireless subscribers
That's within shooting distance of Verizon's $88 billion in 2017 wireless revenue and 111 million subscribers, and ATT's $71 billion and 78
million.Under terms of the deal, Deutsche Telekom will end up with a 42 percent ownership stake while SoftBank will have 27 percent
T-Mobile's Mike Sievert will be president and chief operating officer
The German company's chairman, Tim Hoettges, will serve in that role at the combined company while Legere becomes CEO, and the board will
include Claure and Son.But it's Claure and Legere that proved pivotal to resuscitating a deal: The two men had grown increasingly certain
they shared the same vision of 5G as the future, the people familiar with the matter said."In some fashion the kernel of the thought of why
these companies should come together never left either of us," Legere said in an interview
"This time around I think the realization started with Marcelo and it was more 5G driven.''It remains far from certain however if Washington
will green-light the deal -- the third time that Son has tried to bring the companies together
Previous negotiations broke down also because the two sides couldn't agree on control of the combined entity, people familiar with the
They'd dashed a plan to merge as far back as 2014 after meeting resistance in Washington
Regulators said then that four major competitors in wireless fosters more choice, price competition and innovation -- which proved to be
largely true.Sprint and T-Mobile will try to convince regulators that new entrants such as Comcast mean more competition, not less
Claure told analysts on a conference call that Comcast was now adding more wireless users on a net basis than ATT and Verizon -- combined
The two carriers will thus argue a combination will spur bigger investments in 5G and put pressure on larger rivals, even if the consumer
benefits aren't immediately obvious."If Trump wants to see national 5G and the investment with it, then I think the administration can spin
a story to support this," said Chris Lane, a Hong Kong-based analyst at Sanford C
Bernstein.For Sprint, which hasn't had a profitable year in more than a decade, the merger is a bailout
The company is four years into a go-for-broke turnaround effort launched when Claure took over and started slashing prices to stop customer
And growth at T-Mobile -- one of the more remarkable industry success stories of the past decade -- is slowing."This deal is a great example
of what we will see more of in the telecoms space
If you look at the capex that will be required as a result of 5G build-out, you need to create more economies of scale," Steve Krouskos,
Ernst Young's global vice chairman of transaction advisory services, told Bloomberg Television
"This particular deal will create a strong third player in the U.S
market.(This story has not been edited by staff and is auto-generated from a syndicated feed.)
