Sprint and T-Mobile US are in the process of finalising a merger deal which is expected to be announced during the operators’ earnings calls later this month, Bloomberg reported.
The operators are said to be working their way through due diligence checks and negotiating a final exchange ratio. An earlier report from Bloomberg indicated SoftBank would agree to a valuation near Sprint’s current market price, which stood at $7.50 per share as of Thursday (5 October).
The pair are also hashing out logistical details, such as where the combined operator’s headquarters would be located and who would be on the executive team. CNBC indicated in September T-Mobile US CEO John Legere is expected to remain at the helm, but SoftBank chief Masayoshi Son also wants a say in how the combined entity operates. It is unclear what role current Sprint CEO Marcelo Claure would assume, if any.
Brendan Gill, CEO of network testing company OpenSignal, told Mobile World Live recently a tie-up between T-Mobile and Sprint holds the potential to create a “monster” 4G LTE network capable of posing a serious threat to larger rivals Verizon and AT&T.
A merger deal between the two would have to pass scrutiny from the US Department of Justice (DOJ) and the Federal Communications Commission (FCC), but recent news out of both agencies appears favourable.
At the end of September, the FCC approved a report declaring the US mobile market competitive for the first time since 2009. The scope of the report was noticeably narrowed from previous years to examine only competition in the provision of wireless services rather than in the broader mobile ecosystem.
FCC chairman Ajit Pai said in May he didn’t claim to know “what the right number of competitors should be” in the US mobile market, only that the commission’s goal is “always to make sure that the marketplace functions in a way that benefits the public interest”. The FCC’s competition finding and Pai’s comments marked a departure from the stance of former FCC chairman Tom Wheeler, who refused to rule the US mobile market competitive even with four nationwide operators.
Pai and his Republican colleagues hold a 3-2 majority on the commission which would defeat any opposition from Democrats.
The same week the FCC’s competition report came out, the US Senate confirmed former corporate lawyer Makan Delrahim as the Department of Justice’s new antitrust chief. Delrahim, who was nominated by President Donald Trump in March, previously represented companies including T-Mobile, AT&T, Apple, Google, Qualcomm and Microsoft. Delrahim declined to answer questions about his views on a potential Sprint-T-Mobile tie up during his confirmation hearing, noting only assessments should be made “without regard to political considerations”. However, the Trump administration is widely thought to hold a more permissive view of deals than previous administrations.
In September, Sprint hired Ballard Partners, a lobbying company with ties to Trump, to help it press its interests on Capitol Hill.