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The stars are aligning for Sprint to buy T-Mobile
Sprint is reportedly interested in buying T-Mobile, and now it has the support of banks for the transaction. Meanwhile, T-Mobile’s owner operated organization changes that suggest a sale is incoming.
Rumors about Sprint and T-Mobile joining forces have been making the rounds for months now, and the two companies have not denied interest in a possible merger or acquisition. Now the Wall Street Journal is reporting that Sprint (owned by Japan’s SoftBank) and T-Mobile (owned by Germany’s Deutsche Telekom) have already decided that it would be in their best interest to combine in some form. The decision was made several months ago, according to people familiar with the matter cited by WSJ, but the two sides still have to agree on how exactly to proceed.
Sprint has reportedly received offers from at least two banks that are willing to finance a deal to buy T-Mobile with up to $50 billion, including $31 billion for T-Mo’s shares and $20 billion for covering debt.
Meanwhile, Deutsche Telekom has transferred the ownership of the 67 percent stake it holds in T-Mobile from a German holding company to a holding company it owns in Netherlands. While the group denied the move is in preparation of a sale, analysts cited by Reuters believe that Deutsche Telekom wanted to take advantage of the lower taxes on asset sales in Netherlands.
According to the WSJ, the two sides want to complete the deal before a major spectrum auction in mid-2015. Given that a deal could take 12 to 18 months to pass through all regulatory hurdles, there’s a sense of urgency about it.
Even if Sprint, T-Mobile, and their foreign owners agree on a deal, the FCC and other regulators could stop it in its tracks. That’s what happened when AT&T attempted to buy T-Mobile in 2011. The FCC is worried about further consolidation in the US telecom market, but Sprint and T-Mo could successfully argue they need to join forces to beat the much larger Verizon and AT&T.