Sprint, T-Mobile Look Again At Merger
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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