Sprint owner holds out hope for T-Mobile dealapp

Bloomberg

SoftBank Group Corp.’s Masayoshi Son has a 300-year plan, so if combining Sprint Corp. and T-Mobile US Inc. takes a few years longer than he hoped, that’s OK.
Son, who became one of the world’s wealthiest men by turning Tokyo-based SoftBank into a telecommunications and technology powerhouse, still would like to merge the U.S. wireless providers, according to people familiar with his thinking. SoftBank owns more than 80 percent of Sprint after acquiring the majority stake in 2013, part of Son’s famed plan to build a business empire that can endure through the centuries.
Son considered buying T-Mobile in 2014, before abandoning the effort when officials at the U.S. Federal Communications Commission and Justice Department signaled they were against a theoretical merger. There’s a key figure who will determine if Son makes another run at T-Mobile: the yet-to-be named new head of the FCC. If Son feels that person is more amenable to a combination to take on market leaders AT&T Inc. and Verizon Communications Inc., he will probably try again, said the people, who asked to not be identified because the matter is private.
Neither presidential campaign has said who might be named to lead the FCC. The choice is important because the agency has the power to recommend a proposed deal be sent to an administrative hearing. Such an action could delay a transaction indefinitely. The threat of administrative hearing is what caused Son not to go forward with a T-Mobile deal in 2014, the people said. Last year, FCC officials said they would recommend a hearing on Comcast Corp.’s proposed acquisition of Time Warner Cable Inc., causing the Philadelphia-based company to drop its bid days later.
T-Mobile reversed losses to close 0.3 percent higher at $46.38 in U.S. trading. SoftBank shares fell as much as 4.9 percent in Tokyo trading.
Son’s best argument to the FCC to allow a merger may be that Sprint would never be a robust fourth competitor if left alone. Since his aborted attempt to combine Sprint and T-Mobile two years ago, the companies have been on separate trajectories. While Sprint has had to address financing by mortgaging assets and cutting costs to stay solvent, T-Mobile has sharpened its image as the underdog challenger to Verizon and AT&T. And by offering features like free video streaming, carryover data and low prices, T-Mobile has become the fastest-growing U.S. carrier.
“You would need to see a pretty
significant reversal of fortunes across bothcompanies — Sprint and T-Mobile — for the antitrust enforcers to change theirviews,” said Gene Kimmelman,
a former Justice Department official who’s now president of the Washington-based policy group Public
Knowledge. “You’d have to see a
clear demonstration of a company in jeopardy.”
Matthew Nicholson, a spokesman for SoftBank in Tokyo, declined to comment, as did representatives of Sprint and T-Mobile. The Justice Department can also sue to block a merger, but Son is willing to fight that in court, arguing that the wireless market has changed since AT&T’s attempt to buy T-Mobile in 2011, the people said. AT&T withdrew its $39 billion offer for T-Mobile instead of going to court against the Justice Department, which said it would sue to block the deal. The government argued that putting No. 2 AT&T with then-No. 4 T-Mobile would have left the wireless market too concentrated. FCC Chairman Tom Wheeler has said in recent years that the U.S. wireless market needs four strong wireless providers to provide pricing and service competition.
In Washington, antitrust enforcers don’t want to jeopardize benefits,
such as lower pricing plans, that emerged from T-Mobile after AT&T pulled its bid, said Kimmelman at Public Knowledge.