Sprint, T-Mo­bile Look Again At Mer­ger

L'Opinion - - The Wall Street Journal & Opinion -

Sprint Corp. and T- Mo­bile US Inc. have re­kind­led mer­ger talks, people fa­mi­liar with the mat­ter said, as the wi­re­less ri­vals ex­plore a com­bi­na­tion for the third time in four years.

The la­test dis­cus­sions come just five months af­ter a pre­vious court­ship en­ded lar­ge­ly over who would con­trol the com­bi­ned bu­si­ness. The talks al­so come in the mid­st of an an­ti­trust fight bet­ween the U. S. go­vern­ment and te­le­com­mu­ni­ca­tions giant AT&T Inc.

It is un­clear what terms Sprint and T-Mo­bile are consi­de­ring, and it is pos­sible, as be­fore, that they could fail to reach an agree­ment. The la­test dis­cus­sions are at a pre­li­mi­na­ry stage, the people said.

The talks are com­pli­ca­ted by the ow­ner­ship of the two firms. Ja­pa­nese te­le­com SoftBank Group Corp. owns near­ly 85% of Sprint. Ger­ma­ny’s Deutsche Te­le­kom AG controls T-Mo­bile, which is the lar­ger com­pa­ny both in terms of sub­scri­bers and mar­ket va­lue.

The com­bi­ned com­pa­ny, should a deal go through, would have near­ly 100 mil­lion cus­to­mers, put­ting it just ahead of AT&T, which had 93 mil­lion U. S. sub­scri­bers at the end of 2017, and be­hind Ve­ri­zon Com­mu­ni­ca­tions Inc., which en­ded the year with 116 mil­lion. The fi­gures in­clude both pre­paid ser­vices as well as month­ly sub­scri­bers.

Wall Street has long an­ti­ci­pa­ted the mar­riage of the No. 3 and No. 4 car­riers, and fi­nan­cial ana­lysts es­ti­mate the com­pa­nies could save bil­lions of dol­lars each year by sha­ring net­work in­fra­struc­ture, sto­re­fronts and head­quar­ters.

But a pros­pec­tive mer­ger of the two has run in­to hurdles in the past. In 2014 re­gu­la­tors un­der the Oba­ma ad­mi­nis­tra­tion ob­jec­ted to the com­bi­na­tion, saying four national pro­vi­ders en­sure more choices and lo­wer prices for consu­mers.

It is un­clear what kind of re­cep­tion the deal would get in the Trump ad­mi­nis­tra­tion, which has loo­se­ned re­gu­la­tions un­der the Fe­de­ral Com­mu­ni­ca­tions Com­mis­sion but al­so sued to block AT&T’s pro­po­sed $85 bil­lion ta­keo­ver of me­dia com­pa­ny Time War­ner Inc.

Lit­tle has chan­ged in the wi­re­less in­dus­try since both par­ties last aban­do­ned their talks in ear­ly No­vem­ber, though Sprint’s share price had tum­bled rough­ly 20% through Mon­day while T-Mo­bile held stea­dy.

Sprint’s stock de­cline pu­shed its mar­ket ca­pi­ta­li­za­tion down to around $21 bil­lion, from about $27 bil­lion five months ago. Sprint al­so had more than $32 bil­lion in net debt as of Dec. 31.

Both com­pa­nies’ shares ad­van­ced Tues­day af­ter The Wall Jour­nal re­por­ted on the la­test dis­cus­sions. Sprint sur­ged 17% to $6.02, while T-Mo­bile gai­ned 5.6% to $ 63.13. Sprint en­ded Tues­day with a mar­ket va­lue of about $24 bil­lion. T-Mo­bile has a mar­ket va­lue of rough­ly $ 54

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