SoftBank giving up Sprint control to T-Mobile

Japan’s SoftBank Group Corp is prepared to give up control of Sprint Corp. to Deutsche Telekom AG’s T-Mobile US Inc to clinch a merger of the two US wireless carriers, according to people familiar with the matter.

SoftBank has not yet approached Deutsche Telekom to discuss any deal because the US Federal Communications Commission has imposed strict anti-collusion rules that ban discussions between rivals during an ongoing auction of airwaves.

After the auction ends in April, the two parties are expected to begin negotiations, the sources told Reuters this week.

Two and a half years ago, SoftBank abandoned talks to acquire T- Mobile for Sprint amid opposition from US antitrust regulators. That deal would have put SoftBank in control of the merged company, with Deutsche Telekom becoming a minority shareholder.

T-Mobile was worth around $30 billion at the time, but its market value has since risen to more than $50 billion as it overtook Sprint as the No. 3 wireless carrier by subscribers. Sprint’s market value is around $36 billion, roughly the same as in 2014.

Deutsche Telekom Chief Executive Tim Hoettges has said in recent months that the German company is no longer willing to part with T-Mobile, prompting SoftBank to explore a new strategy towards a potential combination, the people said. Deutsche Telekom owns about 65 percent of TMobile.

SoftBank, which owns about 83 percent of Sprint, has been frustrated with its inability to grow significantly on its own in the US market, which is dominated by Verizon Communications Inc. and AT&T Inc., the two largest US carriers.

While SoftBank is still open to discussing other options, it is now willing to surrender control of Sprint and retain a minority stake in a merger with T- Mobile, the sources said. They asked not to be identified because the deliberations are confidential.

The Reuters report sent shares of T-Mobile surging as much as 7.9 percent before they eased back to close up 5.5 percent at $63.92. Shares of Sprint ended 3.3 percent higher at $9.30.