Sprint Corp (NYSE:S) and T-Mobile Us Inc (NASDAQ:TMUS) are inching closer to complete the merger deal by agreeing to revised terms. According to a communiqué from the companies, the owners of T-Mobile will get eleven shares of Sprint for each of their shares. Deutsche Telekom AG, the German owner of T-Mobile, is most benefitted under the revised terms of the deal. The revised terms of the deal will not have any impact on the guidance and outlook of T-Mobile.
The amended deal is $37 billion
According to Erhan Gurses, an analyst at Bloomberg Intelligence, the equity value of the new deal has increased to $37 billion from the previously agreed deal of $36.5 billion. It is on the backdrop of a 62% increase in the T-Mobile shares from a two year-ago period when the deal announced.
Beneficial for Deutsche Telekom
The amalgamation of the largest wireless companies in the US is beneficial for the Deutsche Telekom because it could reduce the reliance on Europe. Deutsche Telekom generates half of its sales from T-Mobile. Following the deal, Masayoshi Son, the Chairman of SoftBank Group Corp, the owner of Sprint, would focus on the $100 billion Vision Fund and technology investments.
Both the telecom giants expect that the deal would be closed by April 1, 2020. Deutsche Telekom expects to own a stake of 43% in the combined company, whereas the SoftBank would hold 24%. The general public will hold balance shares in the new company. SoftBank and Deutsche Telekom will not alter the shareholder exchange ratio.
SoftBank can reclaim back its original percentage of shares if the stock valuation of the merged entity reaches $150 for each share between 2022 and 2025. The shares of Sprint trade higher at $10.10 (up 6.38%) on Friday. However, the shares of T-Mobile declined to $98.98 (down 0.52%).
The new entity would operate under the name – T-Mobile
On completion of the merger, the combined company would operate under the name – T-Mobile. It will be on par with AT&T in maintaining the subscriber base. The merged entity will command a subscriber base of 80 million when compared to AT&T’s subscriber base of 75 million. Verizon commands a subscriber base of 114 million.