After failing to reach a deal last year, Sprint and T-Mobile have decided they want to merge in an all-stock deal that is basically the same as T-Mobile purchasing Sprint. The newly combined company would be called T-Mobile, and its CEO would be T-Mobile CEO John Legere. The newly combined T-Mobile would have its headquarters in Bellevue, Washington, same as the pre-merger T-Mobile.
If you're a customer of either company--and even if you're not--this deal if completed will affect you in various ways. Here are some questions you may have and what we know so far about the answers:
1. How likely is this to actually happen?
It's a crap shoot. Back in 2011, AT&T agreed to buy T-Mobile but the Justice Department said no because combining those two carriers would make the wireless market insufficiently competitive.
But that was then. There's a new, Republican administration in office now and Republicans are, at least in theory, in favor of business and opposed to government interference in business. The Federal Communications Commission must also approve this merger and its chair Ajit Pai has indicated he is open to it.
But that still leaves the Justice Department, and President Donald Trump whose pro-business inclinations may lead him to support this merger. On the other hand, his distrust of foreign ownership of American companies might lead him to block it. The German company Deutsche Telekom controls T-Mobile and would have 42 percent of the combined company's stock. SoftBank, a Japanese company, controls Sprint.
2. If approved, how big will the new company be?
It will have about 100 million subscribers, more than AT&T, which has 95 million and not quite as much as Verizon, which has about 116 million. The three carriers would pretty much own wireless service in the United States, at least so far as cell phone companies go.
3. If the merger does go through, what will happen to my cell phone bill?
It will probably go up. Legere has said that won't happen, but combined company will have more than $60 billion in debt and it will have to pay it back somehow. Without each other to compete with, there will be little incentive to keep prices low. If the merger goes through, look for changes to start happening beginning next summer or fall, since that's when Sprint and T-Mobile plan to complete their deal.
4. What else will change?
Unlimited data could go away, for one thing. You owe the fact that you have it all to the government regulators who blocked the AT&T-TMobile deal seven years ago.After that, T-Mobile began competing aggressively with the two dominant carriers, offering unlimited data and contract-less, pay-as-you-go options. Customers started switching to T-Mobile, so AT&T and Verizon began offering those things as well.
But big carriers can be good at avoiding too much competition. For example the Justice Department is currently investigating whether AT&T and Verizon worked together to discourage technology that would simplify switching among carriers. It's easy to imagine a scenario in which a newly larger and more powerful T-Mobile rolls back some of that aggressive competitiveness and begins phasing out some of the services people switched to get.
5. Are there any potential benefits?
Yes, one big one. Both carriers say that merging will allow them to more quickly build out ultra-fast 5G networks that now only make it easier to download movies, but will also be needed to connect self-driving cars. The federal government considers 5G important for our technological future. So maybe this merger will happen after all.