There has been talk of a merger between Sprint and T-Mobile, a move that would have massive consequences for the mobile communications industry, since late last year. Now it looks like the deal could actually happen.
Sprint is close to finalizing the purchase of T-Mobile for $40 a share, according to a report from Bloomberg on Wednesday. The deal would value T-Mobile at $32 billion.
Under the agreement, Sprint will offer 50% stock and 50% cash, and would lead parent Deutsche Telekom with a roughly 15% stake in the combined company.
This agreement, if it goes ahead, could be announced as early as next month, though there is no set announcement date as of yet. Besides, there is still a lot of work to be done before a deal is completed, as sources told Bloomberg, and that includes deciding who gets to be in charge of the new company.
The merger between the two companies would be a big deal, since the Sprint and T-Mobile are the third and fourth largest U.S. wireless carriers, respectively. Combining them would allow the new company to compete against the two biggest companies: AT&T and Verizon.
The deal is apparently being pushed very heavily by Masayoshi Son, the founder of Japan-based SoftBank, which bought a majority stake in Sprint back in 2012. It now owns 80% of the carrier.
Of course, even if the two do decide to merge, there is no guarantee that the thing will go through. There is a whole regulatory process, including the Federal Communications Commission, as the Department of Justice, to get through.
All you have to do is look back at the last time a company tried to buy T-Mobile: it was AT&T, which was going to buy the company for $39 billion back in 2011. That deal was scuttled by a DOJ lawsuit, as well as a suit brought on by none other than Sprint, who cited higher prices and less innovation as reasons that the merger needed to be blocked.
The DOJ also cited anti-competition impact that would result, but, ultimately, it was the FCC that stopped the deal from happening.
So, we've got a long way to do before this type of deal ever sees the light of day. No matter what happens, at least it should be really interesting.
Sprint would not comment on the report, while T-Mobile was not available. We will update if we learn more.
(Image source: technobuffalo.com)