Sprint-ing to merger

Parent SoftBank wants T-Mobile deal: sources

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

SoftBank has not yet approached Deutsche Telekom to discuss any deal because the 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 antitrust regulators. That deal would have seen Deutsche Telekom retain a minority stake in T-Mobile, down from about 65 percent.

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 to achieve a potential combination, the people said.

SoftBank, which owns about 83 percent of Sprint, has been frustrated with its inability to grow significantly in the US on its own, where both Sprint and TMobile have struggled to compete with Verizon Communications and AT&T, the two largest US carriers with much deeper pockets.

Investors have said a merger between T-Mobile and Sprint, ranked third and fourth respectively, would still face antitrust challenges, but made strategic sense as the industry moves to fifth-generation wireless technology. Carriers will need to spend billions of dollars to upgrade to 5G networks that promise to be 10 times to 100 times faster than current speeds.

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.

SoftBank, Sprint, Deutsche Telekom and TMobile all declined to comment.

“We may buy, we may sell. Maybe a simple merger, we may be dealing with T-Mobile, we may be dealing with totally different people, different company,” SoftBank Chief Executive Masayoshi Son told analysts on the company’s latest quarterly earnings call earlier this month.