The merger talks between Sprint and T-Mobile US have moved to the next stage as they agreed that Deutsche Telekom will have control and T-Mobile CEO John Legere will be the head of the merged entity, Bloomberg reports.
The No. 3 and No. 4 carriers are discussing a stock-for-stock merger, according to a report in CNBC. CNBC report suggests that SoftBank is aiming for control over the running of the new telecom venture.
SoftBank promoter Masayoshi Son does not want to give up its presence in the US market. SoftBank has other investment plans in digital areas as well.
In 2014, US telecom regulators declined to give approval for the merger. Getting okay from FCC will be the biggest challenge for US telecom players. A three-operator regime will not be good US wireless customers.
GSMA earlier said T-Mobile has become the fastest growing operator in the US, with mobile service revenues growing around 10 percent over the last four quarters. This is also reflected in its ability to win new contract customers, taking 45 percent of net adds over the two years.
T-Mobile plans to start 5G deployments in 2019 and nationwide by 2020. Sprint is suggesting a commercial launch of 5G in late 2019.
Sprint and T-Mobile executives said publicly that a merger makes sense because it would create a bigger wireless carrier to take on larger rivals AT&T and Verizon Communications. The Sprint and T-Mobile combination would be smaller in subscriber size than the industry leaders.
Deutsche Telekom owns about 64 percent of T-Mobile which is a key driver of sales and earnings growth of the German telecom giant. Deutsche Telekom favors a deal with Sprint, which is owned by SoftBank of Japan, because potential savings could come relatively quickly.
“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,” Jennifer Fritzsche, a Wells Fargo analyst, said in a note.
Sprint has posted losses for a decade, even after SoftBank bought control in 2013 and returned the company to subscriber growth. Sprint’s $12 billion debt is coming due in the next three fiscal years, putting pressure on SoftBank, led by billionaire Masayoshi Son, to find a suitable partner.
SoftBank had also tried to save Sprint by initiating exclusive merger talks with Comcast and Charter Communications.
