Is the T-Mobile Sprint Merger Back on the Table?

A few years ago, America’s #3 and #4 mobile telecom companies (Sprint and T-Mobile, respectively) were in talks of a merger. In August of 2014, though, the rivals called it off, claiming there were simply too many US regulatory hoops to jump through. This past December, though, introduced a potential resurgence as SoftBank CEO Masayoshi Son met at Trump Tower with incoming President Donald Trump to discuss matters.

SoftBank is a major financier for Sprint.

At the time, of course, antitrust experts had been skeptical over just how the Trump administration would respond to a potential T-Mobile-Sprint merger since the administration had not made any key antitrust appointments within the Justice Department.

“Both parties have been interested in (a merger) for quite some time,” explains wireless analyst Chetan Sharma, who estimates the merger could have a price tag of approximately $70 billion. He goes on to say, “SoftBank would have to part with a lot of cash, but it has the assets [to close the deal].”

In an interview from earlier this week, T-Mobile chief operating officer Mike Sievert explained, “We’re very strong on a standalone basis. And that being said, we’re also opportunistic and our stance on that has been consistent for years. And if the right opportunities came along to turbo-charge our strategy, our brand, our set of assets, we’d be open to it.”

Son has noted that he expects his company will benefit from Trump’s promise to deregulate the US economy, pledging to invest $50 billion in development, creating roughly 50,000 jobs in the process.

Unfortunately, GAMCO Investors Inc co-chief investment officer, Christopher Marangi disagrees. He argues, “I am of the camp that that will not happen even in a Trump administration,” Christopher Marangi, co-chief investment officer at GAMCO Investors Inc, said on the prospects of a T-Mobile-Sprint combination. “That kind of merger means lots of job cuts in the U.S.”

Finally, MoffettNathanson analyst Craig Moffett, reminds that the price wars between Sprint and T-Mobile has resulted in the downward draw of wireless prices, overall. That is good for consumers. As such, he explains, “Antitrust regulators could well argue that this is precisely the dynamic they would want to preserve.”

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