T-Mobile and Sprint are likely to delay their merger announcement which was originally planned to be made alongside the publication of their consolidated financial reports for the third quarter of the year, Bloomberg reported on Thursday, citing sources close to the two telecom companies. The negotiations between the third and fourth largest mobile service providers in the United States reportedly stalled and will now be pushed by a number of weeks, insiders said, suggesting that an official announcement of the proposed deal will come in the second half of November. Another possibility is that T-Mobile and Sprint delay their earnings reports to November in order to have them accompanied by a major consolidation proposal, though such a scenario presently appears less likely.
SoftBank founder and Chief Executive Officer Masayoshi Son previously tried to acquire T-Mobile and merge it with Sprint which the Japanese conglomerate purchased in mid-2013. That approach was rejected by former Obama administration but may be more successful under the new White House led by President Trump, some industry watchers previously speculated. Sprint and T-Mobile are also in different positions than they were several years back and the latter’s parent Deutsche Telekom now apparently holds more leverage in any potential merger negotiations, not only because it holds a company with a significantly higher market cap but because it can survive another failed consolidation relatively unphased, whereas Sprint stock is understood to currently be riding the wave of merger expectations and would crash if a tie-up was to fall through, according to some analysts.
Recent reports suggest that Sprint and T-Mobile have been in talks about an all-stock deal which would presumably leave Deutsche Telekom in control of the consolidated entity, whereas Sprint would still increase the value of its stake in the U.S. wireless market and have a likely major client for its newly announced cell tower joint venture in the country seeking to disrupt the long-established balance of corporate powers. The likelihood of the deal being approved by the U.S. Federal Trade Commission and Department of Justice remains unclear, though the Federal Communications Commission led by President Trump-appointed Chairman Ajit Pai presumably wouldn’t seek to review the tie-up proposal.
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