T-Mobile - Sprint Merger - Essay Example

It partnered with Clearwire and dominates more than 43 markets. T-mobile International AG is a German holding based in Bonn, operating GSM and cellular networks in Europe and US. Globally T mobile has more than 150 million subscribers and it is 10th largest mobile service provider of world. T - Mobile USA is fourth largest mobile service provider of US. Sprint plans for 4G upgrade through T mobile. T-mobile has effective network build out and better advantage over competitors. T-mobile has high paying customers tied to monthly schemes.

Hence, the merger will be beneficial for Sprint shareholders. Sprint is third largest mobile wireless service provider having increasing number of subscribers and better customer satisfaction rate, and it uses Google’s software, enjoys a strong spectrum position in conjunction with Clearwire’s WiMAX Network making it first 4G product offering and has unlimited data plans. T - Mobile shareholders will be benefitted in the deal as Sprint owns more spectrum than its competitors and its customer list is 48% more than T-mobile.

Overall, it is an attractive stock for shareholders and the target shareholder may earn positive returns from competitive offers. The shareholder earnings of T-mobile and Sprint Nextel depend on the conditions, in which, the deal is made. Mergers can be successful if the merging firms retain focus on better outcomes (Swerdlow et al. 2001, p. 2) Deutsche Telekom spent $30 billion to get VoiceStream Wireless- which is now T-mobile USA and the deal has been beyond limits for Deutsche Telekom, which plans to get into $20 billion to $30 billion deal with Spirit.

The equity value of T-mobile is $26.8 billion and equity value of Sprint is $19.8 million. Sprint’s total market value is $13.8 billion and it carries $20 billion debt load. Sprint suffered losses of $8.6 billion from 2008 -