Sprint and T-Mobile agree $26.5B merger – what does it mean for cellphone users?

They're the 3rd and 4th biggest cellphone plan carriers in the country.
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T-Mobile and Sprint have agreed a merger that would see them challenge Verizon and AT&T for cellphone carrier dominance in the United States.

Under the deal, Japanese-owned Sprint, the country's 4th biggest cellphone plan carrier, would merge with German-owned T-Mobile, the 3rd largest carrier. 

The companies would move forward under the T-Mobile name, with SoftBank getting a 27 percent minority stake and Deutsche Telekom a controlling 42 percent.

In its announcement, both companies were keen to stress the merger would allow them to increase efforts to develop 5G mobile technology, an area in which Asian tech firms seem to have the advantage right now.

The merger will hinge on whether it passes the smell test among antitrust regulators.

The biggest cellphone carriers in the U.S., by subscribers.

The biggest cellphone carriers in the U.S., by subscribers.

What will it mean for phone users?

In its statement, T-Mobile says the merger would grant them greater economies of scale that would allow it to lower costs, and provide "greater competition."

But by "greater competition" it presumably means to Verizon and AT&T, and by "lower costs" it doesn't necessarily mean lower prices for customers.

Related:

– Amazon announces $20 hike for Prime users.

– Want to save on your cellphone? Opt for a no-contract plan.

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The merger would see the major cellphone network market go down from 4 companies to 3, and reduced competition tends to lead to higher costs and less innovation.

The New York Times reports how T-Mobile has helped lead a price revolution in the U.S. since entering the market, becoming the first carrier in the country to offer unlimited voice, text and data plans in 2016, sparking a price war that saw plan costs decline 13 percent over the next year.

And an antitrust official told the newspaper that Sprint and T-Mobile are each other's biggest competitors for middle-income, budget-conscious customers. If they are no longer competing, there's less incentive to offer flexible, innovative products to consumers.

USA Today notes that Verizon and AT&T have been forced to follow the price-cutting examples set by T-Mobile and Sprint, something that may cool down should the companies be allowed to merge.

BMTN's Tip Jar column has advice on saving on your cellphone bill – by opting for a no-contract plan.

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