SoftBank Renews Interest In Sprint Merger With T

Posted February 18, 2017

Here goes another round of will-they-or-won't-they: Reuters is reporting that Sprint parent company SoftBank is again preparing to approach Deutsche Telekom about a T-Mobile merger. However, SoftBank has not spoken to Deutsche Telekom about a merger since the Incentive Auction is now ongoing. The two companies have not yet started to discuss a deal because of strict anti-collusion rules that are in place during an ongoing spectrum auction.

Both companies involved are having a good day in the market with Sprint shares up more than 3.5% and T-Mobile shares up over 4%.

Softbank, Sprint and Deutsche Telekom did not immediately respond to requests for comment. The CEOs of SoftBank and Sprint have expressed interest in doing a deal, and T-Mobile CEO John Legere has said that a merger with Sprint is "one of many potential future outcomes" of T-Mobile working to continue growing.

Given T-Mobile's recent success, Deutsche Telekom is no longer interested in selling the company, leaving SoftBank to pursue another merger strategy.

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RBC Capital, in a January 29 research note, said the Department of Justice would still veto a Sprint-T-Mobile deal.

With T-Mobile's success in the last few years, Deutsche Telekom's Chief has shared they won't consider giving up a majority of T-Mobile. The company made the effort in 2014, but ditched it after opposition from U.S. antitrust regulators.

T-Mobile's stock jumped as much as 5% on the news. In a meeting with then President-elect Trump in early December, SoftBank Chief Executive Masayoshi Son pledged to invest $50 billion and create 50,000 jobs in the United States. How do you feel about the prospect of Sprint and T-Mobile combining their forces? AT&T (T) also was forced to abandon a $39 billion T-Mobile deal in 2011 as a result of pressure from the Obama administration. Another factor is the effort to spend money to upgrade cellular networks to the upcoming 5G speeds.