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    Sprint, T-Mobile Say They’ll Soon Decide Whether to Pursue Merger

    By
    Michelle Maisto
    -
    February 7, 2014
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      When talk of a possible T-Mobile-Sprint merger first arose, it struck many as little more than that—talk. Sprint was “studying regulatory concerns” and contemplating a bid during the first half of 2014, The Wall Street Journal reported Dec. 13.

      “Let’s pop this trial balloon quickly, please,” Public Knowledge Senior Staff Attorney John Bergmayer blogged the same day, as Twitter erupted with Tweets of exasperation and verbal eye rolls from a community that had not yet forgotten, among other lessons, the nine-month drama of AT&T’s attempt to merge with T-Mobile in 2011.

      “Anyone who thinks three carriers is competitive PLEASE TALK TO A CANADIAN,” Tweeted PC Magazine editor Sascha Seegan.

      But the talk has continued and intensified, putting the companies’ stock prices on a rising and falling wave and encouraging more voices to speak up against the deal, or rather, the potential for one.

      Giving the rumors new validity, the Editorial Board of The New York Times addressed them Dec. 31. After laying out the issue, the editorial explained the many changes T-Mobile had made in 2013.

      “It is hard to imagine that any cellphone company would have been as aggressive as T-Mobile if the administration had allowed AT&T to buy the company,” the board wrote. “The logic that the government used to step in still holds today, and antitrust regulators should look closely at any proposal that would reduce competition in the wireless business.”

      T-Mobile CEO John Legere surprised many with his response, when asked about the potential of a merger during the question-and-answer session of a Jan. 8 press announcement. While Legere’s comments, about the aggressiveness and lastingness of T-Mobile, were far from a clear answer, what was clear was that he didn’t dismiss the possibility.

      “The T-Mobile brand is here to stay,” said Legere. “How that ultimately plays out [we’ll have to see]. But we’re a change agent, a maverick … and I think people think that is very important.”

      In mid January, The Journal reported that Sprint had received proposals from at least two banks, suggesting how it might finance a takeover of Deutsche Telekom-owned T-Mobile. According to sources, the proposals put the “enterprise value” of the deal at around $50 billion.

      On Feb. 5, DealReporter announced that Sprint was “getting closer” to securing $45 billion in financing for its T-Mobile bid. A day later, Bloomberg reported that Softbank founder Masayoshi Son and Sprint CEO Dan Hesse would decide “in the next few weeks” whether to move ahead with a bid.

      “Son will also meet with T-Mobile owner Deutsche Telekom AG to relay those conversations so the two companies can determine if they should begin structuring a deal,” Bloomberg reported.

      Earlier in the week, Son met with Federal Communications Commission Chairman Tom Wheeler, who “expressed his skepticism” about such a deal, Reuters reported Feb. 3, citing an FCC official who had been briefed on the matter.

      “Wheeler said he would keep an open mind about the potential transaction … and generally echoed comments made last week by antitrust chief William Baer, who gave long odds to a regulatory approval of mergers between any two of the top four wireless phone companies,” the report added.

      Baer told The Times’ DealBook, “It’s going to be hard for someone to make a persuasive case that reducing four firms to three is actually going to improve competition for the benefit of American consumers.”

      Follow Michelle Maisto on Twitter.

      Michelle Maisto
      Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.

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