SoftBank, Deutsche Telekom hit wall in Sprint, T-Mobile talks

SOFTBANK Group Corp (SoftBank) and Deutsche Telekom AG ( Deutsche Telekom) have reached an impasse in their talks to merge Sprint Corp (Sprint) and T-Mobile US Inc (T-Mobile), sources said, sending shares in the Japanese Internet giant sliding.

At a SoftBank board meeting on Friday, several directors expressed doubts about giving up control of Sprint, people familiar with the matter told Reuters, the latest twist in on-and-off talks to unite the two US wireless carriers that began earlier this summer.

One person briefed on the deal said SoftBank was moving towards breaking off the talks. SoftBank declined to comment.

According to tentative deal terms that Reuters was first to report last month, SoftBank and other Sprint shareholders would have received close to 40 per cent or a little more of the combined company.

If talks fall apart, it would be the second time an attempted merger of Sprint and T-Mobile, controlled by Deutsche Telekom, has failed. Together, they would have more than 130 million US subscribers, behind Verizon Communications Inc and AT&T Inc.

The two companies came close to announcing a merger in 2014, but called it off at the last minute due to regulatory concerns.

Failure to clinch an agreement could also damage the dealmaking credentials of SoftBank chief executive Masayoshi Son, who has raised close to US$100 billion for his Vision Fund to invest in technology companies, and uses his image as a reliable counterparty to clinch deals.

SoftBank shares were down five per cent during yesterday afternoon’s trade after rising around 15 per cent in the past month, helped by hopes of a deal.

Industry watchers had long expected Sprint and T-Mobile to attempt another deal, especially after a quiet period associated with a US government auction of wireless airwaves concluded in April, freeing up companies in the telecom industry to discuss mergers and acquisitions.

But no deal was announced immediately following the conclusion of the restriction on merger talks, and both Sprint and T- Mobile said they were open to exploring other options. — Reuters