Sprint, T-Mobile US merger rumours resurrected - Mobile World Live

Sprint, T-Mobile US merger rumours resurrected

11 APR 2018

Sprint is once again in talks to merge with T-Mobile US after an earlier round of discussions ended in November 2017 over valuation disagreements, Reuters reported.

One reason for restarting the conversation is the two want to share the cost of investing in their networks: negotiations are at an early stage and a key factor is whether Deutsche Telekom can consolidate T-Mobile’s earnings, Reuters said.

Deutsche Telekom, the majority shareholder of T-Mobile US, will probably have to put in new money toward a merger for its stake to remain above 50 per cent.

The operators could face regulatory hurdles as they did in 2014 when their first round of merger talks were met with antitrust concerns from the government.

Caroline Holland, who previously worked at the US Department of Justice’s Antitrust Division, was quoted as saying: “They are probably betting that they can make a competent and convincing argument that it’s more important to have a stronger number three. They’ll make a case that Sprint hasn’t been a strong competitor”.

GSMA Intelligence placed T-Mobile as the number three operator in the US with an 18 per cent market share as of Q1 2018. It is behind Verizon (36 per cent) and AT&T (30 per cent), with Sprint (12 per cent) coming in fourth place.

Debt
Questions have emerged over how Sprint can compete effectively given it holds a long-term debt of more than $32 billion. Parent SoftBank Group is looking to trim its debt as well, which was around $147 billion at end-December 2017.

“SoftBank has to change the way they approach this [merger],” Recon Analytics analyst Roger Entner was quoted as saying.

“Unless they have changed their minds, (and admitted) that they are indeed the junior partner, nothing has changed,” he added.

In November 2017 Masayoshi Son, SoftBank chairman and CEO said he was “very confident” in Sprint’s future, and the operator was a critical part of its plan “to ensure that we can deliver our vision to American consumers”.

A month later, undeterred by the failed merger talks, T-Mobile said it would continue to seek acquisition opportunities in the coming years.

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Saleha Riaz

Saleha joined Mobile World Live in October 2014 as a reporter and works across all e-newsletters - creating content, writing blogs and reports as well as conducting feature interviews...More

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