T-Mobile, Sprint merger watch continues with final details being worked out

According to sources, T-Mobile and Sprint are in the final stages of working out a deal for the companies to merge. These sources say the companies are trying to target their quarterly earnings announcement dates to have everything nailed down. Those announcements should happen in just over a couple weeks from now. Besides some final due diligence items under review, the biggest item to be addressed appears to be the exchange ratio to be used for Sprint’s valuation in what is likely going to be an all stock deal.

Besides being stock only, another big item that could have been a stumbling block is a breakup fee. Sources claim such a fee will not be included in the deal. This is expected to reduce the risk for both companies should something happen during the regulatory review process to kill the merger. Analysts also say this will free up both companies to engage in any appropriate lobbying to make the deal happen.

At least a couple non-cash items are still being worked out between the carriers and their respective backers. These include a final decision on the location of the new entity’s headquarters and who will be appointed to the executive management team. Although a breakup fee is apparently off the table now, there is still the possibility that SoftBank may still try to get a cash termination payment provision included depending on how negotiations on other issues goes.

Besides analysts watching the wireless carrier industry in the U.S., the deal may draw other attention as people watch to see how the Trump administration handles their anti-trust review of the proposed merger. Makan Delrahim was just appointed the head of the Antitrust Division with the Department of Justice and this will be the first major merger to be scrutinized by the Trump administration. If approved, the number of major wireless carriers in the U.S. will drop from four to three and the new T-Mobile/Sprint company will be roughly the same size as Verizon and AT&T.

source: Bloomberg


About the Author: Jeff Causey

Raised in North Carolina, Jeff Causey is a licensed CPA in North Carolina. Jeff's past Android devices include an HTC EVO, a Samsung Note II, and an LG G3, and a Motorola Moto X Pure Edition along with a Samsung Galaxy Tablet 10.1. He currently uses a Samsung Galaxy S8 and (very rarely) a Nexus 7 (2013). He is also using a Verizon-branded Motorola Moto Z Play Droid supplied by his job. Jeff used to have a pair of Google Glass and a Moto 360 Sport in his stable of gadgets. Unfortunately, his wife and kids have all drunk the Apple Kool-Aid and have i-devices. Life at home often includes demonstrations of the superiority of his Android based devices. In his free time, Jeff is active in his church, a local MINI Cooper car club, and his daughter's soccer club. Jeff is married, has three kids, and a golden retriever.