If you thought Verizon’s new unlimited data plan was earth-shattering, you haven’t heard about Sprint’s merger plans. According to a Reuters report on Friday, Sprint parent company SoftBank is prepared to cede control of Sprint to T-Mobile’s parent company, Deutsche Telekom, as part of a proposed merger of the two U.S. carriers.
It’s not a done deal. SoftBank hasn’t broached the subject with Deutsche Telekom executives, reportedly because strict U.S. Federal Communications Commission rules prohibit rival carriers from colluding during ongoing airwave auctions. But the two plan to meet in April.
Complicating matters somewhat is Deutsche Telekom Chief Executive Tim Hoettges’ insistence that the company’s not willing to part with T-Mobile. “We are not in the mood of selling the business,” Hoettges told investors last November.
But SoftBank’s hoping the new strategy gets the ball rolling.
A merger, if successful, would put an end to years-long efforts by Sprint and rival carrier AT&T to purchase T-Mobile. Two years ago, SoftBank offered Deutsche Telekom a minority stake in an acquisition deal estimated in the billions, but walked away in the face of opposition from U.S. antitrust regulators at the FCC and U.S. Department of Justice.
It’s trying again, however, out of “frustration” with its inability to “grow significantly” in the United States, according to Reuters. Rivals Verizon and AT&T have been recording profits magnitudes higher than Sprint and T-Mobile. And forthcoming fifth-generation wireless upgrades, or 5G, are expected to cost billions of dollars.
If SoftBank moves forward with the proposed merger, it will face a much different situation than existed two years ago. T-Mobile’s market value now stands at $50 billion, or about $20 billion higher than its 2014 value. And it has overtaken Sprint as the third-largest wireless carrier in terms of number of subscribers (at the end of 2016, T-Mobile had an estimated 71.5 million compared to Sprint’s 59.5 million).
The rumored deal is expected to face scrutiny. In 2011, AT&T, like SoftBank, was deterred by Justice Department regulators from pushing through a $39 billion takeover of T-Mobile.
In a December note to investors, Barclays analysts wrote that “it is not imminently clear […] that the various regulatory agencies would reverse course having already blessed the outcome of [the current wireless] market.”
But a favorable administration could help grease the wheels. In a meeting with then President-elect Trump in early December, SoftBank Chief Executive Masayoshi Son pledged to invest $50 billion and create 50,000 jobs in the United States.
“We may buy, we may sell,” Son told analysts on the company’s latest quarterly earnings call earlier this month. “Maybe a simple merger, we may be dealing with T-Mobile, we may be dealing with totally different people, different company.”
- What is RCS messaging? Everything you need to know about the SMS successor
- Best cheap cell phone plan deals for March 2021: Verizon, AT&T, T-Mobile
- T-Mobile 5G: Everything you need to know
- 5G network coverage map: Every U.S. city with 5G on Verizon, AT&T, and T-Mobile
- T-Mobile plans explained: 5G, pricing, and features