April 29 (UPI) -- Sprint and T-Mobile -- two of the top four wireless phone carriers in the United States -- announced Sunday they have agreed to an all-stock merger that values the new provider at $146 billion.
T-Mobile's Deutsche Telekom AG and Sprint owner SoftBank Group agreed to combine forces, with T-Mobile paying $26.5 billion in stock for Sprint with the total value including debt.
The combined U.S. company will retain the T-Mobile name and will be headquartered in Bellevue, Wash. A second headquarters will be located at Sprint's site in Overland Park, Kan.
T-Mobile President John Legere will be CEO of the new company and Mike Sievert, the carrier's chief operating officer, will be president.
Sprint CEO Marcelo Claure 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," Legere said in a statement. "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."
In the deal, Sprint is valued at 10 cents per T-Mobile share -- or $6.62 a share based on T-Mobile's Friday closing price of $64.52. This represents a total implied enterprise value of approximately $59 billion for Sprint.
The companies said they expect a savings of about $43 billion but are planning $40 billion in its first three years. The increase in spending is 46 percent more than T-Mobile and Sprint spent combined in the past three years.
Deutsche Telekom will control 42 percent of the combined company and SoftBank will have 27 percent. The public will hold the remaining 31 percent.
T-Mobile and Sprint board of directors have approved the transaction.
Among the four carriers through 2017, Verizon is No. 1 with 150 million U.S. subscribers, followed by AT&T at 141 million, T-Mobile at 72 million and Sprint at 54 million, according to PrepaidPhoneNews. T-Mobile earlier acquired MetroPCS and Sprint owns Boost Mobile and Virgin Mobile.
Cable provider Comcast also has entered the cellphone provider market.
"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," Legere said. "And in 5G, we'll go from 0 to 1. Only the New T-Mobile will have the capacity to deliver real, nationwide 5G. 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."
Claure said the difference between the 4G and 5G is like going from black-and-white television to color.
"The combination of these two dynamic companies can only benefit the U.S. consumer," Claure said. "As we do this, we will force our competitors to follow suit, as they always do, which will benefit the entire country."
The deal still needs to be cleared by U.S. regulators.
In November, the companies were close to a merger agreement before SoftBank CEO Masayoshi Son pulled out after weeks of talks.
In 2014, a planned merger between AT&T and T-Mobile was opposed by regulators and ultimately canceled.
AT&T is seeking Justice Department approval to acquire Time Warner, which owns CNN. And last year, Verizon acquired Yahoo.