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Illustration: Lazaro Gamio/Axios

T-Mobile U.S. and Sprint have agreed to merge in a move to better compete against their two larger rivals in the cellphone business.

Why it matters: Regulators must still approve a deal and, in the past, authorities have been opposed to any deal that would reduce the number of national competitors from four to three.

The combined company will use the T-Mobile name and Sprint shareholders will get 0.10256 T-Mobile shares for each Sprint share they own. T-Mobile majority shareholder Deutsche Telekom will own about 42% of the combined company, while SoftBank (which owns a controlling interest in Sprint) will own 27%, while the public will hold the remaining 31%.

T-Mobile CEO John Legere will run the combined entity, with Sprint CEO Marcelo Claure joining the board.

The deal is expected to close next year, assuming regulators sign off. Of note, there is no regulatory break-up fee to either company if it gets vetoed.

Consumer impact: How consumers will fare is less clear. As much smaller rivals, Sprint and T-Mobile both competed aggressively on price. T-Mobile also led a number of industrywide shifts, including the moves away from subsidized smartphones and two-year contracts.

By the numbers: AT&T and Verizon would still be larger than the combined company, by number of subscribers, but not by much. Together, Sprint and T-Mobile have just under 30% of those who get service from one of the major carriers, compared to 38% for Verizon and 33% for AT&T, according to telecom analyst Roger Entner.

History Lesson: AT&T agreed to buy T-Mobile back in 2011, but pulled the deal once it became clear regulators would never approve it. That forced AT&T to hand over billions in cash along with valuable wireless spectrum to T-Mobile, helping fuel some of its recent success.

  • Sprint and T-Mobile have held talks a number of times, scrapping the effort under President Obama after regulators signaled they would not allow it. The talks restarted after Donald Trump took office, but stalled over issues related to who would control the combined company.
  • An FCC spokesman declined to comment “on potential or announced transactions.” The Justice Department also declined to comment.

More: Sprint and T-Mobile's pitch to D.C.: Good for America.

Go deeper

Ina Fried, author of Login
1 hour ago - Technology

Microsoft to buy Activision Blizzard

Photo: Jakub Porzycki/NurPhoto via Getty Images

Microsoft announced Tuesday it plans to acquire video game giant Activision Blizzard for $68.7 billion in cash.

Why it matters: The move comes as Activision Blizzard has faced a wave of accusations of workplace harassment.

2 hours ago - World

Blinken to visit Ukraine as Russia invasion threat looms

Blinken (R) with President Zelensky. Photo: Efrem Lukatsky/Pool via Getty

Secretary of State Antony Tony Blinken will travel to Ukraine on Tuesday as the country faces an ongoing threat of Russian invasion.

Driving the news: Blinken will meet with Ukrainian President Volodymyr Zelensky and Foreign Minister Dmytro Kuleba, as well as officials at the U.S. embassy in Kyiv to discuss contingency planning. He'll then travel to Berlin to meet German Foreign Minister Annalena Baerbock and attend a meeting of the "Transatlantic Quad" — France, Germany, the U.K. and U.S.

Updated 2 hours ago - World

At least 3 dead after Tonga volcano eruption and tsunami

A satellite image of the explosive eruption of the Hunga Tonga-Hunga Ha'apai volcano on Saturday. Photo: UNICEF/NOAA

At least three people are confirmed to have died in Tonga following the undersea volcanic eruption that sent tsunami waves toward the island nation and across the Pacific over the weekend, officials said Tuesday.

The big picture: Officials reported major damage along the western coast of the main island of Tongatapu, where the capital, Nuku'alofa, was covered in ash and dust, including on the runway of the airport. Officials in Tonga confirmed three deaths in the country's first official statement since the crisis began.