There has been speculation for months now that the number three wireless carrier Sprint was planning to make a bid to buy out T-Mobile USA. According to Bloomberg, the deal is in its final phases, and Sprint plans to announce the buyout for a whopping $32 billion sometime in the next month.
Funded mostly by Japanese telecom company SoftBank, which has a 80 percent stake in Sprint, the deal will fetch T-Mobile USA from its parent company, the German wireless company Deutsche Telekom, for nearly $40 a share. This number is more than triple what T-Mobile USA shares were trading just a year ago. In total, Softbank will pay $32 billion, plus take on T-Mobile’s debts of about $15 billion. Word of the deal has come out during Japan’s trading hours, helping nudge up Softbank’s stock while causing T-Mobile and Sprint’s stock to jump higher in after-hours trading.
This is not the first time a company has tried to buy the magenta-colored carrier. Back in 2011 AT&T tried to purchase T-Mobile, but the FCC blocked the deal and even the Department of Justice issued an antitrust lawsuit against the purchase. There’s no telling if we’ll see such action by the FCC or Department of Justice over this merger. The two carriers, even if they merge, still fall more than 10 million subscribers behind AT&T. But last we checked neither agency was exactly happy about the idea of a merger. Even if the merger fails, T-Mobile is likely to still get about $1 billion in breakup fees.
This is something that T-Mobile’s CEO John Legere has mentioned support of in the past. Legere noted that a bigger company with the same battle plans as T-Mobile would give him the chance to take on Verizon and AT&T like never before.
This is assuming John Legere and his Uncarrier strategy remain a part of the newly formed company. For all we know, Softbank may push to keep longtime Sprint CEO Dan Hesse or opt for an entirely different strategy all together. Then again, before John Legere, T-Mobile was on the verge of being sold off for spectrum after its failed AT&T purchase.
This will be the second major purchase of a wireless carrier in the U.S. by Softbank. Last year the company purchased its 80 percent stake in Sprint for about $21 billion. With this purchase the company will have a powerful foothold in the United States, where it has already been pumping $20 billion to bring Sprint’s infrastructure up to speed.
For now only time will tell what the fate is of T-Mobile. There’s no telling if this will continue to bring competition to the wireless interest or simply set it up for a dangerous triopoly.