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T Mobile and Sprint Talking Again PDF Print E-mail
Wednesday, 17 May 2017 06:01

Sprint and its controlling shareholder SoftBank have started preliminary conversations to merge with T-Mobile US, Bloomberg reported, citing people familiar with the matter. At this point the talks are “informal” only.

The U.S. Federal Communications Commission had barred merger talks among telecommunications companies for more than a year as it conducted a $19.8 billion auction of airwaves from broadcasters for wireless use.

Reuters reported in February that SoftBank was positioning itself for deal talks with Deutsche Telekom, which owns 64 percent of T-Mobile, once the auction was out of the way.

Talk of Sprint (S) attempting to merge with T-Mobile (TMUS) goes back to 2014 when regulators said they wouldn’t entertain such a consolidation. Sprint and T-Mobile then drifted apart to build their respective customer bases. But they still maintain a common goal: to catch up with market leaders AT&T (T) and Verizon (VZ). Sprint and T-Mobile gained 368,000 and 933,000 postpaid phone subscribers, respectively, in 4Q16.

On March 21, 2017, at the Citi European & Emerging Telecoms Conference in London, Neville Ray, T-Mobile’s chief technology officer, resurrected the idea of a possible merger by speaking about the potential network and operating savings from a horizontal merger scenario with another national wireless company. He said that currently, T-Mobile isn’t thinking about a merger with Sprint but that such a connection would be beneficial to Sprint subscribers.

Ray said, “So when I think about network integration, one, I do believe that migrating Sprint customers onto a better network in terms of performance and coverage, that’s a good thing.”

He went on to say, “And based on the capital profile of the company you are talking about, that’s not going to change, to be honest. You’re not going to create coverage and expansion of network with no dollar spend.”

Deutsche Telekom, which shares rose as much as 3.5 percent on the news to a 17-month high of 17.30 euros, declined to comment on the report.

Sprint, SoftBank and T-Mobile US were not immediately available for comment outside regular business hours.