The previously canceled merger between Sprint and T-Mobile may soon be on its way again, with talks set to resume in a few months.
SoftBank, which owns around 83 percent of Sprint, has not yet approached Deutsche Telekom, which owns around 65 percent of T-Mobile, to revive negotiations on the merger of the U.S. carriers, as the Federal Communications Commission has implemented anti-collusion rules that prevent any form of discussion between rival companies during the ongoing auction of airwaves.
After the end of the auction in April, it is expected that the merger talks for Sprint and T-Mobile will once again start, according to several sources of Reuters.
T-Mobile, Sprint Merger Canceled In 2014
T-Mobile and Sprint were moving toward a merger back in June 2014, when Sprint had agreed to pay cash and shares worth $32 billion to acquire T-Mobile. The merged entity would have created a company that can better challenge AT&T and Verizon.
However, a couple of months after, SoftBank decided to abandon its pursuit of merging Sprint and T-Mobile, as constraints in the form of antitrust regulations have started to become hostile and insurmountable. Back then though, it was revealed that the Japanese company retained its interest in the merger, and that it could possibly try again in the future.
Apparently, that time is now.
Revived T-Mobile, Sprint Merger Deal
Since then, T-Mobile has leapfrogged Sprint as the No. 3 wireless carrier in the United States, with T-Mobile increasing its market value from about $30 billion at the time to over $50 billion currently. The market value of Sprint, meanwhile, stayed the same at about $36 billion.
The canceled merger of 2014 would have placed SoftBank in control of the merged carrier company, with Deutsche Telekom to have been relegated as a minority shareholder. However, for the revived discussions, SoftBank is now willing to surrender control of Sprint to Deutsche Telekom and retain a minority stake in the merged entity.
The Reuters report on the revival of merger talks between the two carriers sent the shares of T-Mobile and Sprint surging. T-Mobile share prices increased by as high as 7.9 percent before settling at a 5.5 percent jump to $63.92 each at the close of trading. Meanwhile Sprint share prices closed at 3.3 percent higher at $9.30 each.
Merger Will Again Face Antitrust Obstacles
Revived merger talks between T-Mobile and Sprint will once again be facing obstacles in the form of antitrust regulators and industry watchers, with the possibility that the deal might not be allowed to push through.
It is difficult to determine how the Trump administration will view the merger, though GAMCO Investors co-chief investment officer Christopher Marangi believes that the deal will still not happen under President Trump.
According to Marangi, a merger of T-Mobile and Sprint will lead to job cuts across the United States, which will go against one of Trump's key platforms during his successful campaign of promising more jobs to Americans.
It is also unclear how the merger will be handled by the FCC. Tom Wheeler, the previous chairman, approved of the collapse of the merger in 2014, but new chairman Ajit Pai is viewed among the industry as more friendly to business.
