Sprint sinks after announcing merger with T-Mobile that creates $146 billion telecom giant

Shares of Sprint fell as much as 12% in early trading Monday after the wireless carrier announced its merging with T-Mobile in a deal that values the combined company at $US146 billion.

T-Mobile USA CEO John Legere made the announcement by tweeting a seven-minute video breaking down the merger, while also including a link to a website further explaining the combination. Germany’s Deutsche Telekom owns two-thirds of T-Mobile, and will control the newly formed entity.

The announcement on Sunday marks the culmination of four years of on-again, off-again discussions between T-Mobile and Sprint – and was the third time the two rivals had tried to merge.

With 127 million customers between them, the two newly teamed companies are expected to compete directly with Verizon– the nation’s number one carrier – and second-place AT&T.

The agreement involves T-Mobile exchanging 9.75 Sprint shares per unit of T-Mobile. Deutsche Telekom will own 42% of the combined company, while SoftBank – which controls 85% of Sprint – will own 27%. The remaining 31% will be held by the public.

Sprint’s stock has surged 26% since the Wall Street Journal reported on April 10 that the two companies had rekindled merger talks. T-Mobile’s stock has risen 8% over the same period.

The all-stock transaction values Sprint at 0.10256 per T-Mobile share, or $US6.62 a share, based on T-Mobile’s last closing price. That valued Sprint at around $US26 billion. T-Mobile had a market value of $US55 billion as of Friday’s close, and the two companies have roughly $US60 billion of combined debt.

Shares of Sprint are up 9% since the beginning of 2018, while T-Mobile is flat year-to-date.

Joe Ciolli contributed to this report.