Sprint and T-Mobile Back In Merger Talks, Deutsche Telekom To Get Stake
T-Mobile and Sprint are actively back in talks about the big merger, according to the close sources. If the deal gets closed then, Sprint could collect around $40 billion. Both the telecom carriers reportedly agreed that T-Mobile's parent company, Deutsche Telekom would exercise control over the post-merger single entity as a major shareholder.
Sprint's CEO Marcelo Claure and T-Mobile CEO John Legere will be heading the joint entity. Both Claure and Legere have often locked horns over Twitter, which makes it kind of interesting to see them working together.
CNBC first reported about the resumed merger talks on Tuesday. Although both the companies are back in talks, it is not yet final whether the big deal would finally get sealed. However, just the news of both the telecom giants talking again, got the Wall Street all geared up. The stock of Sprint jumped to 6.8 percent while T-Mobile witnessed an increase to 5.9 percent.
It gives us a deja-vu feeling though, as both the companies have been rumored many times for a possible merger but nothing substantial came out of their meetings. To recall, Sprint and its parent company SoftBank called off acquisition talks with T-Mobile and Deutsche Telekom fearing US regulations over monopoly. Sprint wants to create an intense competition for market leaders Verizon that holds 35.7 percent of total market share and AT&T that holds 33.1 percent share.
Merger talks were called off during Obama administration in 2011
During Obama's regime, it was tough for Sprint to take the merger deal forward as AT&T's plan was snubbed by the Justice Department when it wanted to buy T-Mobile in 2011. Now that Trump is at the helm of the administration, Sprint's plan could pan out successfully with T-Mobile.
According to Jennifer Fritzsche, a Wells Fargo analyst,“Such a deal would take at least a year to get approval and there is much logic on announcing a transaction before the November 2018 election cycle.”
We will get to know more about the merger talks in the coming weeks or months. It will be interesting to witness the shift in market trend after the two carriers become one single entity. Stay tuned with us for more!