T-Mobile's (TMUS) creditors should now be on high alert. 

T-Mobile US Inc.'s merger with Sprint Corp. (S) would downgrade T-Mobile US Inc.'s senior unsecured credit rating, according to Moody's on Monday. Moody's stated in its review that it, "...believes that the process of integrating the two networks is the primary risk factor that could negate the potential benefits of the merger. If the integration work results in a deterioration in service quality as T-Mobile migrates Sprint customers to the T-Mobile network, churn would increase and New T-Mobile would suffer damage to its newly defined brand and reputation operating as a combined company." 

While the credit rating company projects a senior unsecured rating downgrade, there is potential for the merger to benefit both Sprint Corp. and T-Mobile US Inc. The filing discusses the possibility of a successful outcome if T-Mobile can manage the debt that it will face post-merger. If T-Mobile fails to handle the debt maturity, Moody's believes that, "The combined effects of increased churn and lower share of gross adds could pressure New T-Mobile's revenue and cash flow. If sustained, a negative subscriber trajectory would undermine the confidence of investors and present liquidity difficulties for the combined company, especially as it addresses ramping debt maturities in later years. The combination of weaker cash flow and a deterioration of debt capital market confidence would dramatically increase the probability of default at the combined company."

Moody's added, "The combination of T-Mobile US and Sprint will substantially improve the combined company's cost structure enabling it to invest in its network as the company prepares to develop capacity for 5G technology applications." 

Following the news of the merger, both T-Mobile and Sprint saw their stock prices fall. T-Mobile shares fell 3% in afternoon trading, while Sprint plunged 15%. 

If the merger goes through, it is expected to close in June 2019.

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