Sprint Working on a Bid for T-Mobile US An Offer Would Test Whether U.S. Regulators Would Allow 3 Major Carriers
Sprint Corp. is working toward a possible bid for rival T-Mobile US Inc., people familiar with the matter said, setting the stage for a giant telecom merger that if permitted by regulators would leave the U.S. wireless market dominated by three big companies.
Sprint is studying regulatory concerns and could launch a bid in the first half of next year, the people said. A deal could be worth more than $20 billion, depending on the size of any stake in T-Mobile that Sprint tries to buy.
A merger of the third and fourth largest U.S. carriers would create a sizable competitor to industry leaders Verizon Wireless and AT&T Inc. But it would likely face tough opposition from antitrust authorities, who worry consumers could suffer without a fourth national competitor to keep a check on prices.
Sprint hasn't yet decided whether to move ahead with a bid. Going forward despite regulators' concerns would be highly risky. Any pursuit of a bid by Sprint could be aimed at testing antitrust officials' reaction to a deal, and a bad reaction could put an end to the effort.
Any bid would come just months after Sprint and T-Mobile completed mergers of their own and would cap a period of extraordinary consolidation in the U.S. wireless market.
It has only been two years since the Justice Department shot down AT&T's $39 billion deal to buy T-Mobile. The smaller carrier is wary of wasting more time on an ultimately fruitless merger deal, people familiar with its thinking said.
Driving the current effort is SoftBank Chief Executive Masayoshi Son, an aggressive acquirer who bought control of Sprint earlier this year and has made no secret of his desire to grow in the U.S. via further deals. SoftBank currently owns more than 80% of Sprint.
Deutsche Telekom AG owns about 67% of T-Mobile US and is looking to possibly exit the U.S. market, the people said. T-Mobile, which became publicly listed this spring after merging with smaller rival MetroPCS Communications Inc., has a market capitalization of just over $20 billion.
Together, Sprint and T-Mobile would have nearly 53 million so-called postpaid subscribers—the industry's most creditworthy and lucrative customers. That would still leave the combined company a distant third to Verizon Wireless, which has about 95 million postpaid subscribers, and AT&T, with about 72 million.
Executives from Sprint and T-Mobile have argued publicly that the government should allow a combination of the two companies, as it would give them the scale to make the network investments and spectrum purchases needed to compete against Verizon Wireless and AT&T.