Wednesday, 29 March 2017

Softbank prepared to hand over control of Sprint as part of T-Mobile merger

By Nick Wood, Total Telecom
Monday 20 February 17

Fresh rumours suggest that Japan-based telco is willing to go to great lengths to seal a deal.

Softbank would be willing to hand over control of U.S. arm Sprint to T-Mobile US in order to secure a merger between the two telcos. This is according to sources cited by Reuters late last week. According to the report, Softbank has not approached T-Mobile parent Deutsche Telekom about the alleged proposal because the Federal Communications Commission (FCC)'s anti…

Softbank would be willing to hand over control of U.S. arm Sprint to T-Mobile US in order to secure a merger between the two telcos.

This is according to sources cited by Reuters late last week. According to the report, Softbank has not approached T-Mobile parent Deutsche Telekom about the alleged proposal because the Federal Communications Commission (FCC)'s anti-collusion rules prohibit discussions between rivals during an ongoing spectrum auction.

The report does not name the spectrum auction in question, but it presumably refers to the incentive auction; bidding concluded earlier in February, and the process is due to enter the assignment phase – where winning bidders have the option to bid for specific frequency blocks – in early March.

The auction is expected to be completely done and dusted in April, at which point, Softbank and Deutsche Telekom are expected to begin negotiations, according to Reuters.

Sprint held merger talks with T-Mobile in 2014, but strong opposition from the FCC and Department of Justice (DoJ) led to those talks being broken off again.

T-Mobile was worth around $30 billion (€28.25 billion) when those talks took place, reported Reuters, but its value has since risen to more than $50 billion, after aggressive competitive tactics spearheaded by firebrand CEO John Legere found favour with consumers, resulting in T-Mobile becoming the country's third-largest mobile operator by subscribers, overtaking Sprint.

Softbank CEO Masayoshi Son reignited speculation about a possible merger between Sprint and T-Mobile during his company's most recent quarterly investor call.

He said that while Sprint can succeed as a standalone company, he is also open to any options regarding his U.S. operation.

A fresh attempt by Sprint and T-Mobile to merge would doubtless engender a strong reaction among the authorities, as well as consumer advocacy groups.

However, with Trump in the White House, and a new FCC chairman, Ajit Pai – who is said to favour a market-led approach to regulation – the prospect of two of the country's big four nationwide mobile operators coming together may not encounter the same degree of regulatory opposition as it did the last time around.

Please enable JavaScript to view the comments powered by Disqus.

Newsletter signup

Quickly get on board and up to date with the telecoms industry