T-Mobile will pay $ 3.5bn for Nokia in the implementation of 5G in the US

T-Mobile and Sprint began negotiations for 4 years Photo: JEENAH MOON / THE NEW YORK TIMES
A T-Mobile sign in Times Square in New York, April 28, 2018. T-Mobile and Sprint, in reaching a merger deal Sunday, argue that combining is the only way they can fight back against the two industry leaders, Verizon and AT&T. (Jeenah Moon/The New York Times)

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The Nokia and T-Mobile announced on Monday (30) a $ 3.5 billion agreement with a focus on 5G telephony network. The US operator has contracted Nokia for services involving mobile network equipment to implement the new standard.

This billionaire agreement was considered the largest so far involving 5G technology. Completed in June this year, the new standard is now available for worldwide marketing. With this agreement, T-Mobile becomes the third giant in the industry to seek pioneering new technology in the United States, along with Verizon and AT & T.

The 5G standard promises not only higher internet speeds across the globe, but technology could decrease latency by ten times and increase the number of connections in ten times as well.

With this new agreement, Nokia needs to deliver hardware, software and service structures with the expectation that T-Mobile will be capable of 5G coverage at 600 MHz and 28 gigahertz speeds.

“We’ve invested everything in 5G,” said Neville Ray, chief technology officer at T-Mobile. “Every dollar we spend is a 5G dollar, and our contract with Nokia underscores the kind of investment we are making to bring customers a 5G mobile network across the country. And along with Sprint, we can do a lot more, “the statement said.

he deal, if implemented, will combine the third and fourth largest mobile operators in the United States. The agreement ends four years of business-to-business negotiations, setting the stage for the creation of a carrier with 127 million customers and better able to compete with AT & T and Verizon, which today lead the market.

Deutsche Telekom, the parent company of T-Mobile, will own 42% of the combined company, while Japanese group SoftBank, owner of Sprint, will hold 27%. The company will be led by T-Mobile president John Legere.

New technologies and fierce competition in mobile telephony were the motivators of the merger. Sprint and T-Mobile expect to save more than $ 6 billion by merging operations, despite the different management styles of their controllers and the more stringent regulatory environment in the US.

Companies must still face a tough regulatory battle in Washington, as the Republican government has not been very receptive to mega-mergers. In November last year, the Justice Department filed a lawsuit to block the purchase of Time Warner by AT & T, a $ 85 billion deal. In 2011, the government forced AT & T and T-Mobile to abandon their merger plan.

Negotiations. The first round of talks between Sprint and T-Mobile ended unsuccessfully in 2014 after the then US President Barack Obama’s administration expressed antitrust concerns about the deal.

Last year, the companies abandoned the talks after disagreements over who controlled the joint venture, sources said. SoftBank has almost 85% stake in Sprint, while Deutsche Telekom controls about two-thirds of T-Mobile.

The company has not yet specified when the technology should reach customers in the United States; however, said in the statement that it intends to create a 5G network there “in the early critical years of the 5G cycle.” AT & T has already been keen to get ahead with 5G later this year.

Softbank’s founder Masayoshi Son was reluctant to give up Sprint’s $ 22 billion buyout in 2013. One source said, however, that the pressure for Sprint to launch the 5G technology left it more receptive to the idea of ​​a merger. Son will be part of the board of the combined company, the command of the collegiate will be the president of Deutsche Telekom, Tim Höttges. Sprint president Marcelo Claure will also sit on the board.

Softbank has sought to reduce its own debt, which reached 15.8 trillion yen ($ 147 billion) at the end of December. The company said it is planning to raise money by opening the capital of its Japanese mobile unit this year.

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