Boston, MA 12/26/2013 (wallstreetpr) – Sprint Corporation Inc (NYSE:S) is zeroing in on acquisition with T-Mobile US Inc (NYSE:TMUS). The Wall Street Journal first reported about talks between the third and the fourth largest U.S. carries, early this month. Similar reports have also been carried by Japan’s Nikkei news service which says that, the deal is already at an advanced stage and could close any time soon.
Sprint Corporation Inc (NYSE:S) is owned by SoftBank Corp, a Japanese company which acquired 80 percent of S this year. It is SoftBank that is seeking to bring more market share and power to Sprint by purchasing T-Mobile US Inc (NYSE:TMUS), owned by Deutsch Telekom, a German communications company. The deal is expected to be worth more than $19 billion.
Transaction
The purchase of T-Mobile US Inc (NYSE:TMUS) could be an all-stock, all-cash or stock and cash. However, it is reported that owners of T-Mobile are also keen on sealing a cash transaction with Sprint Corporation.
Market clout
If Sprint Corporation Inc (NYSE:S) closes a deal with T-Mobile, it would effectively cut the number of biggest carriers in the U.S. market to three. Currently AT&T Inc. (NYSE:T) and Verizon Wireless Inc. (NYSE:VZ) are top two carriers in the market. The dominance of AT&T and Verizon Wireless has denied Sprint and T-Mobile the market share they needed to register good profits.
It would therefore, be a sweet deal for Sprint Corporation if it can close a deal with T-Mobile to take on the two top carriers in a fierce competition for voice, text and data subscribers.
Regulatory issues
It is almost a foregone conclusion that Sprint Corporation Inc (NYSE:S) is in need of T-Mobile US Inc (NYSE:TMUS), and that the latter is interested in the cash. However, if history is anything to go by, there is every reason to be worried about the deal sailing through before the U.S. regulators. About two years ago, AT&T Inc. (NYSE:T) failed to get the nod of regulators to buy T-Mobile. It is said that U.S. regulators are keen on keeping the number of largest carriers in the market at four and attempts to contest this notion can always be a hard sale.
But it remains to be seen as to how Sprint Corporation (NYSE:S) navigates these tricky waters.
