Some corporate mergers hit the markets like a meteor strike, landing all at once and with little warning. The potential Sprint/T-Mobile combination is more like a slow moving hurricane that never seems to come ashore as it waxes and wanes in strength. But landfall looks more likely now than ever.
The rumors out of Japan have jumped the Pacific and are now coming out of sources in the US. A deal is nigh, and the price tag for T-Mobile USA will apparently be about $40 per share with a major league breakup fee. That would value T-Mobile at something north of $32B, but of course we’re missing a heck of a lot of specifics. Deutsche Telekom would supposedly keep a 15-20% piece of the combined company.
That Softbank and DT could come to terms should surprise nobody at this point, given the public comments of each. The problem this year has been finding a viable path to winning over the regulators, given their own public comments in opposition. It should be interesting to see if Softbank and DT have anything new to offer on that front when this deal gets formally announced.
But with a Japanese giant on one side and a German one on the other, I suspect that allies are going to be hard to come by here. The politicians are in the middle of an off-year campaign season in which firing up the base is more important than compromising, and they don’t even have an American dog in this hunt. AT&T and Verizon certainly aren’t going to be helping out in the creation of a potentially viable threat to their duopoly, and Big Cable is preoccupied with the Comcast/TWC deal.
Competitive network operators of all sizes that have been getting more and more into wireless backhaul won’t be happy to see four turn into three. The thing about both Sprint and T-Mobile is that neither has a wireline turf where they control backhaul. Alternative operators make up a bigger piece proportionally for both of them than for the big two, and the network consolidation and grooming would be the biggest the sector has ever seen.
As for consumer advocates and such, I can’t see them arguing for fewer choices right now either. Other than those in the markets with a direct monetary interest in the outcome, the list of people ready to go to bat for a Sprint/T-Mobile deal seems pretty short.
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Categories: Mergers and Acquisitions · Wireless
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Didn’t Wheeler tell the Softbank CEO that he would frown on this merger? I think it happened just before the Comcast-TWC mereger.
He did, which is why the real story will be how they plan to convince him rather than that the companies themselves can come to terms.
Everyone knows Wheeler was a patsy to the former CEO of EarthLink. Now that he is gone from EarthLink and Wheeler no longer has a need to protect that failing business (ie. a CLEC trying to compete but failing miserably due to inept management team) he has no reason to stand in the way of this merger. Sprints execution over the years has been horrible and t-mobile while certainly performing of late their network is terrible compared to others and they can’t go on in perpetuity paying for ETF’s since they will eventually run out of funding for market stealing activity.