Merger talks between T-Mobile US and Sprint are at an advanced stage and a deal could be in place by next week, potentially putting an end to years of speculation and ushering in a new era for the US mobile market.
T-Mobile’s owner Deutsche Telekom and Sprint’s parent SoftBank have made significant progress since resurrecting talks earlier this month, several reports citing sources close to the matter stated. A prior round of discussions collapsed in November 2017.
Reuters reported this latest round of talks centred on how the parent companies would wield their voting control over a combined operator.
The eventual agreement could see Deutsche Telekom consolidate the combined company within its books, even if it does not own a majority stake, added Reuters. Deutsche Telekom and T-Mobile are also reportedly in the process of finalising a debt financing package.
T-Mobile has fared better than Sprint in recent years, building up its subscriber base and network assets. But GSMA Intelligence figures for Q1 2018 show the operator remains a distant third with an 18 per cent market share compared with 36 per cent for Verizon and AT&T’s 30 per cent.
Sprint held a 12 per cent share at end Q1. The operator holds a long-term debt of more than $32 billion and has struggled to compete in an ever competitive mobile market.
Formidable player
No doubt the proposed tie-up would create a formidable player in the US, with a market capitalisation of more than $80 billion. Perhaps most crucially, a deal will enable the two groups to share the cost of investing in their networks, with next-generation 5G technology on the horizon.
The US is expected to be among the first to commercially launch 5G networks, with AT&T earmarking a mobile launch at the end of this year.
However, sources warned there was still no certainty a deal will be reached. Even if a merger is agreed, it would undoubtedly face regulatory hurdles, as was the case with an attempted tie-up in 2014.
It is unclear at this stage how the Trump administration would react to a merger agreement: notably AT&T’s aquisition of Time Warner was blocked by the Department of Justice over competition concerns and the issue is now being fought out in court.
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