Sprint resumes early talks on T-Mobile merger

Bloomberg

Sprint Corp. has resumed preliminary talks about a potential merger with T-Mobile US Inc., people with knowledge of the matter said, as billionaire Masayoshi Son explores ways to build scale for a carrier facing increasing competition in the US wireless market.
The two wireless operators restarted discussions after Sprint’s exclusive negotiating period with Comcast Corp. and Charter Communications Inc. expired at the end of July, according to the people, who asked not to be identified.
The discussions show that Son, who leads Sprint’s largest shareholder SoftBank Group Corp., is pursuing all options for industry consolidation as he continues to weigh a potential offer for Charter. SoftBank has been considering making a formal takeover bid for the cable company and combining it with Sprint, people familiar with the matter said earlier.
“From SoftBank’s perspective, if they get the T-Mobile deal done, that’s probably enough for a while,” Dan Baker, an analyst at Morningstar Investment Management Asia Ltd. in Hong Kong, said. “The benefit is clearly that the competition reduces — they get a business that has enough scale to compete with other big players.”
Shares of SoftBank rose 2.4 percent to 9,023 yen in Tokyo, giving it a market value of $90 billion.
Debt Maturities
Sprint has lost billions since SoftBank bought control in 2013, and the US wireless company’s looming debt maturities put pressure on Son to find a partner. Sprint has argued publicly that a merger with T-Mobile makes sense because it would create a bigger wireless carrier to take on larger rivals AT&T Inc. and Verizon Communications Inc. A surge in the value of Sprint’s wireless spectrum holdings has persuaded executives to consider other deals, too, people familiar with the matter said earlier.
Executives from Sprint, which has a market value of $35 billion, and T-Mobile have lauded a potential merger of the two companies as offering substantial synergies. The idea of the combination was shot down by regulators in 2014, but with a new administration in Washington preliminary discussions picked up earlier this year.
Sprint Chief Executive Officer Marcelo Claure said last week a decision on possible mergers is close at hand, potentially setting a new course for a company that has been slashing costs to stem mounting subscriber losses. Representatives for T-Mobile and Sprint declined to comment.
SoftBank is considering various options for Sprint and is nearing a decision on the future of the wireless carrier, Son said at a briefing in Tokyo after the Japanese company reported quarterly profit that beat analysts’ estimates.
SoftBank has lined up as much as $65 billion in financing as it separately considers a deal for Charter, which would bring Sprint together with the No. 2 US cable company, people familiar with the matter said last week. A combination with Charter would allow Sprint, the fourth-largest US wireless carrier, to offer a full suite of services to customers from home broadband internet to phone plans.