It seems T-Mobile and Sprint might be getting cozy in the near future.
Sprint parent company SoftBank is reportedly willing to hand off control of the carrier to T-Mobile U.S. parent Deutsche Telekom in a move meant to entice the latter into a merger of the two U.S. operators, Reuters reported.
According to Reuters’ sources, SoftBank is open to ceding control of Sprint and holding onto only a minority stake in the company in the event of a merger with T-Mobile. SoftBank currently owns more than 80 percent of Sprint.
Shares for both companies spiked on the news on Friday, but were back on the level by Monday morning.
Reuters indicated no formal discussion between the two companies has yet taken place since T-Mobile is bound by the FCC’s quiet period rules as a participant in its ongoing low-band spectrum auction. However, negotiations are expected to pick up once that restriction is lifted, presumably in April.
In the last merger bid back in 2014, the plan was for Sprint to acquire T-Mobile from Deutsche Telekom. But with the Un-carrier’s recent success, DT is no longer inclined to offload the business. The result has forced SoftBank to consider other strategies for Sprint, which CEO Masayoshi Son hinted at earlier this month during SoftBank’s earnings call.
“Two years ago or three years ago, we just saw one option, one way: we are always the buyer,” Son said via a translator during the presentation. “But now we may buy, we may sell … Sprint’s business itself is becoming a driving force of our growth on its own standalone basis. So we can do that or we may be able to enhance the enterprise value by having a partnership. So there are so many options available and we are looking into that.”
Merger chatter has reached fever pitch in the months since President Donald Trump’s election and inauguration – fueled by inklings of forthcoming deregulation and tax reform – but analysts have been less optimistic.
J.P. Morgan pegged the odds of a Sprint-T-Mobile deal at 35 percent, with a 70 percent chance of approval. MoffettNathanson, however, has remained even more skeptical, noting a merger between carriers would be “hard to sell,” both to T-Mobile parent company Deutsche Telekom and the Department of Justice.
