Sprint Corp (NYSE:S) and T-Mobile Us Inc (NASDAQ:TMUS) have agreed to merge. Shares of S stock rose as much as 10% on Friday on reports of a deal that will create the second-largest mobile carrier in the U.S.
The news comes four years after a marriage of the two companies was blocked by the Obama administration over concerns that market consolidation would reduce carrier choices for consumers and ultimately lead to higher prices. The carriers said they hoped the deal would be completed by July 2019.
The two companies believe that in tandem, the combined business could create a better 5G wireless network than either company could alone, according to news reports. The Trump Administration has said that a 5G network is crucial for the country’s economic and national security.
As 5G deployments begin, the massive increase in capabilities will usher in demand for new devices that can accommodate the technology.
A combined T-Mobile and Sprint, with almost 100 million retail subscribers as of Dec. 31, would jump to the number 2 spot, ahead of AT&T Inc. (NYSE:T), with 93.6 million, and behind Verizon Communications Inc. (NYSE:VZ), with 116.3 million customers.
According to media reports, T-Mobile would effectively be buying Sprint for about $26.5 billion — T-Mobile’s controlling shareholder, Deutsche Telekom AG (ADR) (OTCMKTS:DTEGY), would own 42% of the combined company. Japan’s SoftBank, which controls Sprint, would own 27%.
As InvestorPlace contributor Luke Lango wrote last week, T-Mobile’s “un-carrier model has been a huge hit among consumers. It is a unique business model in the wireless market that really makes customers feel like they are getting a great deal, which they are.”
Zacks last month noted that superfast 5G networks will in the near term “provide primary impetus to the telecom industry.” Meanwhile, last September 2017, Moody’s Investors Service said the evolution towards 5G wireless networks will fuel higher capital spending for the U.S. wireless carriers.