Prospects for the planned merger of Sprint (S) and T-Mobile (TMUS) brightened considerably after reports surfaced claiming that the Department of Justice believes three national 5G wireless providers are sufficient to ensure fair and effective competition.
The proposed $26.5 billion deal between the two carriers comes after numerous failed attempts. The deal, which is in the initial stages of regulatory approval, is estimated to bring in annual cost savings of over $6 billion for the combined entity.
New York Post reported that US regulators believed that just three national providers were adequate, which sent the shares of both Sprint and T-Mobile up sharply on Monday.
The duo aims to create an entity that is strong enough to take on top rivals Verizon (VZ) and AT&T (T), both of which are way ahead in the 5G race. Sprint and T-Mobile have argued that they must join forces in order to compete.
If the deal wins an approval from the Justice Department and FCC, the combined company will have over 127 million customers and will be in a better position for the deployment of 5G technology.
Deutsche Telekom, which owns over 63% of T-Mobile believes that the deal will make it through. Timotheus Hottges, CEO of Deutsche Telekom said the deal is good for the consumers as well as the country as a whole.
T-Mobile’s latest effort to convince regulators
Consumer groups have voiced concerns about the deal stating there will be a hike in prices if the two companies are allowed to merge. In order to convince the regulators that the merger would benefit customers, T-Mobile this week rolled a new plan called ‘T-Mobile Essentials’.
The unlimited data, talk monthly plan starts at $60 for a single line. The company will charge $30 for the second line and an additional line can be availed by paying extra $15. This new plan matches Sprint’s unlimited plan and is less than the base offer at Verizon.