Sprint, T-Mobile Merger Rumors Are Nothing More Than a Trial Balloon
NEWS ANALYSIS: The vague news report that surfaced Dec. 13 that Sprint was considering buying T-Mobile is something called a "trial balloon." But the reality is that there's likely nothing here but the wizard behind the curtain.Last week a set of rumors popped up in an occasionally reliable newspaper called The Wall Street Journal to the effect that Sprint was considering a purchase of its smaller rival, T-Mobile. The newspaper didn't attribute the report to specific sources, but only stated that it was told by "people" that this could be true. I'll avoid a discussion about unattributed and unsourced stories other than to suggest that we might want to take this report with a grain of salt. Here's what likely happened. Somebody at Softbank, which is the majority owner of Sprint and is the Japanese carrier run by billionaire Masayoshi Son, called a buddy who knows somebody at The Journal and said something to indicate that somebody at Softbank is thinking about adding T-Mobile to Softbank's stable. There's no indication, either in the loosely sourced story at The Journal or elsewhere, that it went beyond this. Specifically, there's no indication that anyone has talked to T-Mobile or its majority owner Deutsche Telekom about such a plan.
The idea behind such a trial balloon is to see what the reaction by competitors, shareholders and the government might be if a merger such as this one were to be proposed and negotiations were to ensue. So far, the reception has been largely negative. It's hard to see what T-Mobile would gain from such a merger, and it's unlikely that T-Mobile's stockholders would benefit.