According to a report recently published by Bloomberg, major US wireless carriers T-Mobile and Sprint are said to be finalizing the terms of a proposed merger deal, which could be officially announced before the end of this month, when both companies will be releasing their respective quarterly earnings report. As indicated in Bloomberg’s report, the final agreement is not expected to include a break up fee, which should minimize risks for the third and fourth biggest mobile operators in the United States, that is if the proposed merger is not approved by the country’s regulatory bodies.
Despite news of a deal being finalized, various industry watchers still believe that there is no guarantee of a merger happening for sure. And the chances of success will decrease if the agreement is not consummated by November of next year, when midterm elections will be held. If by then Washington D.C. will find itself with more anti-corporate sentiment, it might be harder for corporate tie ups to become approved. As reported by The Hill just a few days ago, no less than eight Senate Democrats have already requested regulators to evaluate the possible effects of a T-Mobile-Sprint merger.
About a month ago, Cowen & Company Equity Research had estimated that the chance of a merger deal between T-Mobile and Sprint being announced is at 60 percent to 70 percent, which is an adjustment from the previous 80 percent to 90 percent estimate. As for the chance of regulatory approval, it is about even.
If T-Mobile and Sprint are really intent on making a merger happen, the general understanding is that they will have to be prepared to concede a few things. These could include conceding some spectrum, which could be acquired by other interested companies, like Dish for instance, as they try to enter into the wireless business.
Talks of a potential merger between T-Mobile and Sprint are nothing new. Half a decade ago, Softbank had spent over $20 billion in order to acquire Sprint’s business, and was looking to also acquire T-Mobile, with the intention of combining the two carriers to compete against the duopoly of Verizon Wireless and AT&T. US regulators, however, had opposed the move. But now that President Donald Trump is in power, a T-Mobile-Sprint tie up could finally become a reality. But much has changed since then -- T-Mobile is now looking to be the buyer party, as Sprint continues to face financial woes while trying to catch up to the rest of the Big Four (it is currently fourth behind Verizon, AT&T, and T-Mobile).
