Reports: Sprint And T-Mobile Closing In On Deal
Softbank Chairman and CEO Masayoshi Son has apparently had a soft spot for T-Mobile for some time now, which is why he wants Softbank-owned Sprint to merge with T-Mobile.
Such a union between the third- and fourth-largest U.S. wireless carriers may have inched a step closer Wednesday with reports from Bloomberg and others that the two companies have come to terms on a deal. According to the reports, Sprint would acquire T-Mobile for around $40 a share in a blockbuster deal valued anywhere from $31 billion to $50 billion.
Previous reports suggested that T-Mobile’s principle owner, Deutsche Telekom, was willing to let Softbank buy T-Mobile.
Any deal announcement could be weeks away, or fall apart, the reports note. The dealmakers still must overcome what remains a potentially major roadblock, notably that U.S. regulators are reluctant to go from four major carriers down to three. Back in 2011, the U.S. stonewalled a potential merger between AT&T and T-Mobile. “I’m absolutely convinced the (Justice Department) is going to try and block it,” says telecom analyst Roger Entner of Recon Analytics, who says the potential deal might have to play out in the courts.
But industry analyst Jeff Kagan says that in light of recent merger announcements between Time Warner and Comcast, and AT&T and DirecTV, the regulatory climate is changing. “There is still a lot of water that must pass under this bridge before we know whether this merger will be approved, but I would say the chances are much stronger today than they were just a few short months ago.”
T-Mobile and Sprint declined comment.
T-Mobile has been gaining wireless customers in the U.S., thanks to outspoken CEO John Legere and an “Uncarrier” strategy that has shaken up the industry. T-Mobile has eliminated wireless contracts, agreed to pay early-termination fees assessed by rival carriers when customers switch to T-Mobile and gotten rid of overage fees, among other measures.
Son refused to discuss a possible bid for T-Mobile during an appearance at the Code tech conference last week but continued his spirited campaign to persuade regulators and the public that Sprint should find a merger partner to create a more robust competitor in the wireless industry.
Son made his case without naming T-Mobile or acknowledging merger discussions. But he did express his admiration for Legere and called T-Mobile “disruptive.”
“It makes a lot of sense for the two companies to get together,” Recon analyst Entner says, adding the deal would “combine network assets, consolidate the two value players in the market, and provide larger economies of scale.”