T-Mobile US Inc is close to agreeing tentative terms on a deal to merge with Sprint Corp, people familiar with the matter said on Friday, a major breakthrough in efforts to merge the third and fourth largest US wireless carriers.
The transaction would significantly consolidate the US telecommunications market and represent the first transformative US merger with significant antitrust risk to be agreed since the inauguration of US President Donald Trump in January.
The progress toward a deal also indicates that T-Mobile and Sprint believe that the US antitrust enforcement environment has become more favorable since the companies abandoned their previous effort to combine in 2014 amid regulatory concerns.
The latest development in the talks between T-Mobile and Sprint comes as the telecommunications sector seeks ways to tackle investments in 5G technology that will greatly enhance wireless data transfer speeds.
Japan’s SoftBank Group Corp, which controls Sprint, and other Sprint shareholders will own 40 to 50 per cent of the combined company, while T-Mobile majority owner Deutsche Telekom and the rest of T-Mobile shareholders will own the majority, the sources said.
SoftBank founder Masayoshi Son met with Trump late last year and said in February that the Japanese firm should benefit from Trump’s promised deregulation.
Once terms are finalised, due diligence by the two companies will follow and a deal is expected by the end of October, though talks may still fall through, the sources said.
A merger would create a business with more than 130 million subscribers, just behind Verizon Communications Inc and AT&T Inc. Revenues would top $70 billion and analysts say there would be massive scope to cut costs.
Sprint shares were up 5 per cent in afternoon trading in New York on Friday to $8.44, giving the company a market capitalisation of close to $34 billion. T-Mobile shares were up 0.4 per cent to $63.66, giving that company a market capitalization of around $53 billion.
