Sprint, T-Mobile Merger Talks Continue as Softbank Pushes for Deal
NEWS ANALYSIS: Softbank and Deutsche Telekom are continuing to negotiate a deal to sell T-Mobile to Sprint, but it's not clear how they will craft a deal that will win regulatory approval.Talks between two non-U.S. carriers are well along in paving the way for a merger of two U.S. wireless companies. The two companies, Softbank of Japan and Deutsche Telekom of Germany, have apparently agreed that Softbank will buy a majority of shares in T-Mobile U.S. via its Sprint subsidiary. According to unsourced stories released by the Nasdaq and Nikkei markets over the weekend, both companies have reached a basic agreement and Softbank has lined up the required financing through a consortium of Japanese and U.S. banks to come up with the $39 billion it will take to cover the full cost of the deal. The shares being bought from DT will cost Softbank an estimated $32 billion. There are still details to be worked out, including a $2 billion break-up fee demanded by T-Mobile U.S. That break-up fee would be paid to T-Mobile if the merger fails. You may remember that T-Mobile benefitted hugely from the nearly $4 billion break-up fee paid by AT&T when its merger ran afoul of regulators three years ago. This effort to merge Sprint and T-Mobile gathered steam following a renewed PR effort by Softbank in June. However, Softbank actually started its efforts to add T-Mobile to its telecom stable in 2013, shortly after Softbank completed its purchase of Sprint.
What's going on here is that Softbank CEO Masayoshi Son wants a bigger chunk of the U.S. wireless market than he can get by just owning Sprint, especially with Sprint's fortunes in decline as its Long Term Evolution (LTE) rollout fumbles.