Hints and rumours that Sprint Wireless and T-Mobile USA could merge have been floating about for some time. Such a deal appears closer than it’s ever been as the two companies (via their parent companies SoftBank and Deutsche Telekom respectively) have now agreed “on the broad outlines of a merger” that would see Sprint acquire T-Mobile for US$32 billion. “People familiar with the matter” have told The Wall Street Journal that a deal could happen as early as this summer.
Should the two companies complete their merger, the combined company would have about 100 million subscribers. In comparison, the two largest U.S. carriers, Verizon Wireless and AT&T, have 122 million and 116 million subscribers respectively (according to recent 2014 numbers).
Such a deal will require approvals both the Federal Communications Commission and the Justice Department. The report adds that Sprint is confident enough that the deal would go through that it is ready to pay T-Mobile more than US$1 billion in cash and other assets should the deal be rejected.
AT&T tried to acquire T-Mobile USA back in 2011 in a US$39 billion deal. The U.S. government moved to block the deal, arguing that the deal would violate U.S. antitrust law and would “substantially lessen competition” in the U.S. wireless market. The move caused AT&T to drop the deal and fork over a US$4 billion break-up fee to Deutsche Telekom. The Sprint merger may have a better chance if only because it is a much smaller competitor.
Source : The Wall Street Journal