Deutsche Telekom pushed to change the terms of T-Mobile US’ proposed merger with Sprint due to the latter’s poor performance over the last two years, Financial Times (FT) reported, a move which could cause further delay or even scupper the troubled alliance.

Two sources told the financial newspaper Deutsche Telekom pressed Sprint owner SoftBank to reduce the price originally agreed almost two years ago, arguing the company’s share price and performance had since dropped.

The tie-up between T-Mobile US and Sprint was announced in April 2018, under the terms of an all-stock transaction worth $26 billion at the time. But the deal was left in limbo as the companies faced a number of regulatory and legal challenges.

A court decision this week looked to have spelled the end of the saga, as a judge rejected a legal challenge by 14 attorney generals, which voiced opposition on competition grounds.

The judge presiding over the case dismissed concerns the tie-up would reduce competition, pointing out if the deal collapsed, Sprint risked going out of business anyway.

Emboldened DT
Deutsche Telekom’s confidence it is within its rights to change the terms of the deal appears to have been boosted by the judge’s ruling and comments, given Sprint’s troubles, FT‘s sources explained.

Under the current terms, Sprint shareholders would hold a third of the combined company. FT pointed out that since those terms were struck, Sprint’s earnings have remained flat, while T-Mobile’s are up by a fifth.

If its new terms are not met, T-Mobile also has the option to walk away from the deal, as the long delay meant the original offer technically expired towards the end of 2019.