Thursday, 22 June 2017

Sprint, T-Mobile US holding early deal talks

By Nick Wood, Total Telecom
Friday 12 May 17

Report claims execs from U.S. operators' respective parents have been in contact over a possible tie-up.

Sprint has begun preliminary merger talks with T-Mobile US, it emerged on Friday. This is according to sources cited by Bloomberg, who claimed that representatives from Sprint parent Softbank have had informal contact with their counterparts from T…

Sprint has begun preliminary merger talks with T-Mobile US, it emerged on Friday.

This is according to sources cited by Bloomberg, who claimed that representatives from Sprint parent Softbank have had informal contact with their counterparts from T-Mobile parent Deutsche Telekom.

Softbank CEO Masayoshi Son has gone on record as saying that while he believes Sprint can succeed as a standalone company, he is also open to striking a deal. Meanwhile, earlier this week, Deutsche Telekom CEO Tim Höttges said he sees several advantages to consolidation in the U.S.

However, formal talks between telcos have been forbidden in the U.S. for the past several months under the rules of the recently-concluded 600-MHz spectrum auction. That embargo was lifted at the end of April.

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

A lot has changed since then though, with T-Mobile overtaking Sprint to become the country's third-largest player behind AT&T and Verizon. T-Mobile was worth around $30 billion (€28.25 billion) when those talks took place in 2014, but its value has since risen to more than $50 billion. The unit is by some distance Deutsche Telekom's biggest driver of revenue growth.

The regulatory landscape has also changed though, with the Trump administration thought to be more open to major industry consolidation.

Furthermore, new FCC chairman Ajit Pai is keen to ensure that more consumers are able to receive high-speed broadband services. He might be inclined to sanction a deal that includes a commitment to invest heavily to extend network coverage.

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