Sprint and T-Mobile nearing merger agreement

T-Mobile and Sprint, respectively the third and fourth largest wireless carriers in the U.S., are nearing a merger agreement, undisclosed sources told Reuters Friday. A due diligence period would follow the finalization of the agreement’s terms, but the companies expect a deal by October, according to Reuters’ source.

In August, Reuters says, Sprint CEO Marcelo Claure said an announcement regarding merger talks would come in “the near future.”

The merger proposal would be the first one “with significant antitrust risk” to be submitted to the Federal Trade Commission since President Donald Trump took office, Reuters notes. The President was elected on a platform that included the deregulation of the business environment.

Mayoshi Son, the founder of Japanese venture capital firm SoftBank, which controls the Sprint Corporation, met with Trump in late December, just after the former tycoon won the election.

Son found Trump’s business policy potentially favorable for SoftBank, and promised to invest $50 billion in the U.S. economy and to create 50,000 jobs.

A merger proposal would evince Son’s confidence that the regulatory environment has become laxer since Sprint and T-Mobile abandoned a merger proposal in 2014 amidst pressure from the FTC.

Indeed, the FTC might be more receptive to a transformative merger in the telecom industry now than it was three years ago. Earlier this year, Reuters says, FTC Chairman Ajit Pai said “effective competition [exists] in the marketplace for mobile wireless services.” Thursday, the agency will vote on whether to submit Pai’s report on the state of competition in the wireless services market to the U.S. Congress, which requires such a report annually.

But, the terms of the new merger will likely be less advantageous for Son and Sprint than those reached in 2014. Under the previous deal, Sprint would have controlled the combined company, while T-Mobile’s parent company, Deutsche Telecom, would have become a minority shareholder.

Over the past three years, though, T-Mobile has outperformed Sprint. Accordingly, the terms of the new agreement will likely flip, Reuters’ source said. Deutsche Telecom and T-Mobile stockholders would own a majority of the combined enterprise, while SoftBank and the rest of Sprint’s shareholders would have a minority stake.

T-Mobile CEO John Legere, who took the reins in 2012 and has guided the company’s surge, will likely run the combined company.

The merged enterprise would have 130 million subscribers, Reuters notes, making it the United States’ third-largest wireless carrier, behind AT&T, which had 136.5 million subscribers as of July, and Verizon, which reported 147.2 million subscribers that same month.

Sprint’s market cap of approximately $34 billion, combined with T-Mobile’s $53 billion figure, would give the new company a value of around $87 billion. AT&T’s market cap is about $237 billion; Verizon’s exceeds $205 billion.

Sprint reported annual revenue of $33.3 billion for fiscal 2016, which ended March 31. T-Mobile posted $37.2 billion in annual revenue for calendar 2016. So, the combined company would likely generate over $70 billion annually.

Verizon posted consolidated revenues of $126 billion and wireless revenues of $89.2 billion in 2016. AT&T’s figure came in at $163 billion.

Analysts say the Sprint/T-Mobile merger provides ample opportunity to cut expenses as well.

In their bid for regulatory approval, the companies will likely emphasize that the combined company would create jobs by making investments in the development of 5G, the next generation of mobile internet connectivity.

But the merger will also precipitate layoffs as the new company consolidates its corporate structure, Roger Entner of Recon Analytics told Reuters.

According to Reuters, Sprint briefly pursued a merger with Charter Communications earlier this year.

The FTC continues to review another potential consolidation in the industry: AT&T’s proposed $85.4-billion acquisition of Time Warner.

Sprint shares jumped six percent Friday; T-Mobile stock rose 1.06 percent.

RootMetrics Releases Cellular Performance Data for First Half of 2017

On Tuesday, RootMetrics, a renowned independent research company that collects data on the reliability of cellular networks, released its report for the first half of 2017, Daniel Kline of themotleyfool.com reports. Testers drove 276,607 miles—further than the distance between the Earth and the moon— to perform just under 4.7 million tests of cellular performance.

Verizon once again came out on top overall, with a score of 94.5, but competitors closed the gap. AT&T received an overall score of 92.9; Sprint came in third with a score of 87.9, followed by T-Mobile at 86.5.1.6 points separated Verizon and AT&T, the range from top to bottom was a mere 8 points.

In the latter half of 2016, Verizon received an overall score of 93.9. AT&T scored 90.5, Sprint 84.7, and T-Mobile 81.2. Verizon and AT&T were separated by 3.4 points, and the range from top to bottom was 12.7 points.

The most recent report acknowledges that AT&T, Sprint, and T-Mobile all “made significant strides” in “metro-level performance,” which “provides the strongest gauge of a network for consumers.” RootMetrics considers not just “city centers” but “residential suburbs, business districts, recreational areas, and the highways that connect them” to be “metropolitan areas.” An overwhelming majority of consumers use their phones in such areas most of the time.

Verizon earned 617 first place awards in metropolitan areas. AT&T garnered 396, T-Mobile came in third with 271, and Sprint trailed the pack with 211. Verizon garnered 41 fewer first places than it did in the second half of last year, while AT&T picked up 24 more.

AT&T and T-Mobile “made big speed and reliability improvements in metro areas,” and even Sprint saw “significantly boosted data speeds and reliability at the metro level,” RootMetrics told The Motley Fool in an email.

Though RootMetrics claims the tests are impartial, some skeptics, including T-Mobile CEO John Legere, have argued otherwise. In an email to the media in February 2016, Legere accused Rootmetrics of severely handicapping T-Mobile in the study covering the second half of 2015.

“They manipulated their testing of the T-Mobile network, choosing to turn OFF Voice over LTE, our network technology that is on every single phone we sell,” the e-mail read. “VoLTE handles roughly 50% of calls made on the T-Mobile network. That is 250 million calls per day, or over 40 BILLION T-Mobile calls that RootMetrics just CHOSE to exclude in their latest tests. So the latest (and by latest, I mean up to 7 months old) RootMetrics results are worthless.

Legere claimed the “manipulation” was deliberate, and that “other carriers,” who “pay RootMetrics millions of dollars” receive favorable treatment in the tests.

RootMetrics told The Motley Fool it turned off VoLTE for the tests in question because “in the second half of 2015,” the feature “was only available on a small number of devices,” and “was not what the majority of consumers were experiencing.

“T-Mobile did add more VoLTE technology over the course of [the] last six months of 2015,” RootMetrics conceded, “but due to our rigorous scientific approach we do not switch out testing methodology for any carrier once our testing begins in a half.”

RootMetrics included VoLTE in its next report, regarding the first half of 2016, and in all subsequent studies.

Verizon is still the clear front runner among cellular service providers: it received 47 outright first place awards in metropolitan tests. AT&T was the next closest with 12 outright first places. T-Mobile won four, Sprint just one.

Last year, though, Verizon won 55 metropolitan tests outright. AT&T came in a distant second with 4 outright wins.

So, competition in the cell phone service sector is tightening, and consumers stand to benefit.

“Verizon is the leader with AT&T the clear No. 2,” Kline writes, “but for a lot of people, T-Mobile and Sprint have improved to the point where they are reasonable options, especially since they are the cheapest of the four major carriers.

T-Mobile is Ahead of the Competition with More Data on its Unlimited Plan

In case you haven’t noticed, this year has brought about many changes when it comes to smart phones and their carriers. Many of the top carriers have begun offering unlimited data plans. Every announcement from one carrier is followed by an even bigger announcement from another. In order to stand against competitors, AT&T got rid of its triple-play requirement for those who chose its unlimited plan.

Every major carrier might have a different plan, but one thing remains the same for all of them. Once you fall over that monthly data usage number, the soft cap comes in effect. It’s called a soft cap because consumers aren’t cut off from the data completely and there’s no threat of an overage charge. Even though you aren’t being charged and they won’t cut you off, there’s still a limit that applies.

However the competition never really sleeps. In fact, T-Mobile increased its data limit in order to flag in more customers from rival mobile plans. T-Mobiles previous data limit used to be 28GB per month. Recently, though, the company has boosted that number up to 30GB per month. Once that number is reached during the month, you will be “deprioritized” during the peak times.

That 2GB increase might sound like just a smidge of raise, however, it has pushed T-Mobile up to the front of the line when it comes to data allowance. Its competitors, AT&T and Verizon stop the buck at just 22GB. Sprint, on the other hand, comes at number two with 23GB of data.

https://youtu.be/pvDxysWmmEE

If the word “deprioritize” caused you to scratch your head, don’t worry. It means exactly what you think. Other customers will be given top priority. This means that if you happen to be in a crowd of people, your data is going to slow down.

These data numbers, if you stop to think about it, are quite generous. There’s also no actually guarantee that there’s going to be perpetually slow internet once a user has come to the end of their data limit. These numbers are, however, something to consider if you or someone on your plan happens to be heavy handed when it comes to data usage.

Trump Claims Victory Over Sprint’s 5,000 New Jobs

Sprint says it will “create or bring back” nearly 5,000 customer care and sales jobs for Americans. Another company called OneWeb also plans to create around 3,000 jobs for Americans.

President-elect Donald Trump claims to take credit for both announcements.

SoftBank, a Japanese company that owns controlling stake in Sprint and has large investments in OneWeb, had announced it had a 50,000-job plan this winter. Whereas SoftBank had announced it would make $100 billion in technology investments long before Trump won the election, it didn’t announce the addition of jobs until December.

Although some of its jobs are still headed for Mexico, Sprint’s job announcement follows a month after Trump helped the company retain nearly 800 jobs. Sprint did, however, cut 2,500 call center jobs earlier in the year.

Despite cutting jobs, though, Sprint, along with SoftBank, says it is in full support of Trump. Sprint CEO said that the company is “excited to work with President-elect Trump and his administration to do our part to drive economic growth and create jobs in the U.S.”

OneWeb CEO, Greg Wyler, says that Florida-based will bring “lots of skilled manufacturing jobs” and that the company has hopes of bringing internet access using small satellites. Wyler did say that his biggest concern as a business owner is taxes and hopes Trump has plans of lowering them in the next four years.