T-MOBILE AND SPRINT
TO COMBINE, ACCELERATING 5G
INNOVATION & INCREASING COMPETITION
- 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 Höttges, 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 Revenue1 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.
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
inpredicting 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 TMobile’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 forwardlooking 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 forwardlooking 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.
Source: T-Mobile and Sprint media announcement
