Sprint and its majority owner SoftBank will wait for the outcome of discussions with regulators before deciding whether to proceed with a bid for T-Mobile US, Bloomberg reported.
Sources said SoftBank CEO Masayoshi Son and Sprint chief Dan Hesse will make the decision in the next few weeks, with Son due to meet representatives of T-Mobile owner Deutsche Telekom to communicate the regulator views and potentially begin to structure a deal.
It is believed the Department of Justice and Federal Communications Commission haven’t been keen on such a deal in initial talks but also haven’t completely dismissed the idea.
It is unlikely Deutsche Telekom and SoftBank will pursue the deal if they think regulators will block it but the discussions could indicate what concessions would make the deal more viable.
SoftBank has argued that the US mobile market should be seen as dominated by two players (Verizon Wirelss and AT&T), rather than having four equal competitors. The combination of Sprint and T-Mobile is the only way to create the competition necessary to break the duopoly, it claims.
At the end of 2013 Verizon Wireless had an estimated 118.3 million connections, according to GSMA Intelligence estimates, with AT&T on 110.4 million. Sprint trailed with 54.6 million while T-Mobile had 46.7 million.
But T-Mobile’s ‘uncarrier’ strategy, which has seen it gain subscribers from other networks, is providing the kind of competition that the US Justice Department has long sought. In a letter sent to the Justice Department and FCC on 7 January, the American Antitrust Institute said T-Mobile would be unlikely to continue its pricing approach if it was acquired by Sprint.
Bloomberg also points out that Sprint’s case could be hampered as it previously argued for an independent T-Mobile when AT&T attempted to acquire the US number-four in 2011.
It was previously reported that SoftBank entered talks with Deutsche Telekom to discuss issues relating to a potential deal, including how much cash and stock it would need to pay for Deutsche Telekom’s 76 per cent stake in T-Mobile, as well as how Sprint and T-Mobile would be integrated.
Another issue is a breakup fee if a deal fails. Sources said SoftBank and Sprint could not afford a financial penalty as high as the $7 billion in cash and assets that AT&T paid when its attempt to acquire T-Mobile failed in 2011.