The Bellevue telecom company is once again in talks to merge with rival Sprint, and the third time could be the charm. The combination would have more than 127 million customers, putting it within spitting distance of the industry’s top two, Verizon and AT&T.

Share story

T-Mobile, the last carrier left standing from Washington state’s decadeslong pioneering role in the wireless industry, could announce as soon as this weekend a deal to nearly double in size.

The Bellevue telecom company is once again in talks to merge with rival Sprint, and the third time could be the charm. A combined company would have more than 127 million customers, putting it within spitting distance of the industry’s top two, Verizon and AT&T.

T-Mobile and Sprint have reversed positions in the four years since they first attempted to combine in 2014.

Then, Sprint was the country’s third-largest wireless carrier, and T-Mobile’s parent company Deutsche Telekom was eager to offload its U.S. arm. But that deal faced an uphill battle with federal regulators and was eventually abandoned, leaving T-Mobile’s future uncertain.

Defying the odds, the company hired an aggressive chief executive, John Legere, launched competitive marketing campaigns and went on to leapfrog Sprint to take the No. 3 spot in the U.S.

If the deal goes through this time and survives regulatory scrutiny, it would be Deutsche Telekom doing the buying, and it’s almost certain that T-Mobile’s magenta brand would be the one to persist.

The deal could be worth $24 billion, according to Bloomberg, and would value Sprint shares at $6.10. The company’s shares closed at $6.50 on Friday.

T-Mobile’s headquarters in Bellevue, and its 5,500 employees, would likely face layoffs from the reduction of sales and marketing teams that comes with nearly every merger, said Chetan Sharma, a closely watched industry consultant based in Issaquah.

But the deeper cuts are likely to come in Sprint’s suburban Kansas City headquarters, he said.

“It was even possible three or four years ago that it could have been different, but now there’s no question that T-Mobile is going to dominate in terms of management teams and brand,” Sharma said.

Both companies would likely seek a quick resolution — signs suggest the Trump administration could be open to approving such a merger, meaning that waiting until after the midterm elections could make things riskier. And a federal auction for airwaves is expected to commence this fall, which would trigger the start of a quiet period where the carriers are not permitted to discuss deals.

T-Mobile and Sprint did not respond to requests for comment on the potential merger.

The latest attempt at a deal comes after years of uncertainty about the future of T-Mobile’s ownership, underscored by the company’s rapid subscriber growth.

Six years ago, T-Mobile was in last place among the four major telecom players, almost an afterthought to its larger, more entrenched counterparts.

But in true underdog fashion, the Bellevue company made significant gains in recent years, bouncing past Sprint in 2015.

Much of its momentum came from aggressive marketing campaigns, urging consumers to “break up” with their mobile carriers and instead adopt T-Mobile at discounted rates, perks included.

T-Mobile first announced unlimited video streaming, then unlimited data, sending power users flocking to the Bellevue telecom. Competitors followed suit with similar unlimited plans, but that did little to stem the flow of subscribers to T-Mobile.

Outspoken CEO Legere is known for calling out the other three carriers, often calling Verizon and AT&T “dumb and dumber.”

In the meantime, T-Mobile bet big on its own network, winning a federal spectrum auction last year. Pieces of its newly acquired network starting to come online last summer, and T-Mobile says much of it will be used to power the upcoming shift to 5G connectivity, which promises superfast speeds.

T-Mobile continues to expand its customer base at a fast clip, reporting it added 5.7 million customers during 2017. The company now has 72.6 million customers.

The company’s “Uncarrier” promotion campaign that encouraged so many people to sign up “has really changed the game, in terms of the overall health of the industry,” said Sharma.

It also put pressure on the other players in the industry to figure out what to do next, he said.

Federal regulators concerned about too much consolidation in the industry blocked a 2014 deal that would have combined T-Mobile and Sprint, but a friendlier environment for corporate interests under the Trump administration sparked conversations again last year. Those talks unraveled, however, after Deutsche Telekom and Sprint parent SoftBank, led by Japanese billionaire Masayoshi Son, could not agree on terms.

But the two could not be held apart for long.

T-Mobile was undoubtedly in a stronger position during the latest negotiations than it had been in 2014 talks with Sprint. Deutsche Telekom is no longer in such a hurry to offload the growing business, but changing customer behaviors in the U.S. are pressuring the telecom and cable industries to figure out which mergers and deals would get the industry growing again.

“It’s a capital-expenditure intensive industry, and so having more than three operators having a national footprint just doesn’t make sense,” Sharma said, pointing to countries around the world from Germany to Canada to Mexico that all have three main carriers.

A combined company would have more to spend on network expansion, a possible upside for consumers.

But it remains to be seen if federal regulators would let the deal proceed, going against previous decisions.

Allowing a combination would cut the number of major U.S. carriers to three, which some worry could reduce competition too much and possibly lead to higher prices for consumers.

A bellwether could be the pending AT&T and Time Warner merger, Sharma said. If it goes through, Sprint and T-Mobile may have a better chance of making the case that their deal is necessary to maintain a challenge to their larger competitors. If not, well, there’s always next year.