Saturday, 21 October 2017

T-Mo, Sprint in new merger talks

By Mary Lennighan, Total Telecom
Tuesday 19 September 17

Deutsche Telekom would emerge as controlling shareholder in merged U.S. mobile entity, according to CNBC

Rumours have again surfaced about merger talks between T-Mobile US and Sprint. The two U.S. operators are in active negotiations, CNBC reported on Tuesday, citing unnamed sources close to the situation. The parent companies of both operators have held frequent discussions about an all…

Rumours have again surfaced about merger talks between T-Mobile US and Sprint.

The two U.S. operators are in active negotiations, CNBC reported on Tuesday, citing unnamed sources close to the situation.

The parent companies of both operators have held frequent discussions about an all-stock transaction that would see Deutsche Telekom become the majority owner of the merged entity, the sources said. Sprint parent Softbank would hold a large minority interest.

However, they added that any deal – should one emerge – is still weeks away.

The report builds on a similar piece published by Bloomberg just over a month ago, which suggested that talks between Sprint and T-Mobile US restarted after the expiration of a period of exclusivity for negotiations between Sprint, Charter and Comcast at the end of July.

T-Mobile US chief executive John Legere would lead the merged entity, according to CNBC, but Softbank CEO Masayoshi Son has indicated that he would want a say in the running of the company. The news outlet notes that that adds another layer of complexity to the negotiations.

In addition, T-Mobile has yet to begin due diligence on Sprint. The outcome of that process could change price expectations and even the desire of the firm to move forward with a deal.

Talk of a merger between Sprint and T-Mo is nothing new. The pair have often been linked in recent years in no small part due to their efforts to keep pace with U.S. mobile market leaders AT&T and Verizon.

They last made a serious bid to join forces in 2014 though, but a proposed tie-up was derailed by regulatory opposition.

Since then, AT&T has bulked up with the acquisitions of DirecTV and Time Warner, although the latter is not yet finalised, while Verizon has picked up AOL and Yahoo; it renamed its content assets Oath earlier this year and is on the verge of announcing a content deal that will work across its various platforms.

Nonetheless, a merger of the third and fourth players in the market would still attract regulatory scrutiny and the telcos could struggle to garner support for it.

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