According to sources that spoke to Reuters today, “T-Mobile US Inc is close to agreeing (on) tentative terms on a deal to merge with Sprint Corp.” A merger of the two wireless carriers has been an on-again, off-again deal for several years with the two never quite able to get the time and business environment just right to make it happen. Sources now believe that “the U.S. antitrust enforcement environment has become more favorable since the companies abandoned their previous effort to combine in 2014.”
As more recent reports of the talks have suggested, signs point to T-Mobile and their majority owner Deutsche Telekom emerging as the controlling party with a 50 to 60 percent stake in the combined entity and the balance going to Sprint and their majority owner SoftBank of Japan. That would be the opposite of how things were going in 2014 when Sprint was attempting to buy T-Mobile. Both companies saw their stock prices rise on Friday, more so for Sprint, as Wall Street reacted to the news that a deal may be very close.
If the two companies succeed in merging, they would have around 130 million subscribers and would jump to being in the same ballpark as Verizon and AT&T instead of lagging far behind as the two companies do now. Revenues would be expected to exceed $70 billion while analysts think some very significant cost cutting measures could be implemented. A merged company should also be in a much better position to move ahead with creation and deployment of a 5G network infrastructure.
The sources, citing confidentiality, hinted that a deal could be announced as soon as the end of October once due diligence is completed. The proposal would still face antitrust regulatory review in what could be the first major merger under the Trump administration.