Might President-elect Donald Trump open the door to a T-Mobile merger with Sprint?
Investors seemed to pose that question following Tuesday’s election outcome by bidding up shares of the Overland Park-based wireless company on Wednesday.
Sprint stock jumped more than 11 percent, or 73 cents, to $7 in midday trading.
The 2016 presidential election had become a milestone for merger watchers after President Barack Obama’s administration slammed the door shut on a possible merger in 2014. A new administration in 2017 might be more open to the idea, the argument went.
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Few expected Trump to head that administration, and his election hardly resolves the uncertainty.
“If he would be a traditional orthodox Republican I would have said yes, this raises the chances a lot,” said Roger Entner, telecom industry analyst and founder of Recon Analytics. “But he has much more of a populist streak, and there you don’t know.”
Trump’s populist streak showed, for example, when he quickly raised doubts about AT&T’s proposed acquisition of Time Warner Inc.
The answer to the Sprint/T-Mobile merger environment, however, likely lies with Trump’s choices to head the anti-trust division of the U.S. Department of Justice and the Federal Communications Commission. Without those names, analysts declared the question about a merger’s chances to be premature.
The personalities of the moment also may not be ready for a Sprint/T-Mobile merger.
Sprint CEO Marcelo Claure openly supported Trump’s rival Hillary Clinton in social media posts that included #ImWithHer.
Claure raised money for Clinton at a Sept. 30 dinner held in his Miami Beach, Fla., home. The invitation letter, which Sprint made public, said Trump was “just too risky.”
On the other side of a potential merger, Trump may not favor T-Mobile’s CEO John Legere. The two of them had a social media throw down a year ago as cataloged in a report by the website Mashable.
“Both men are known for their unabashed Twitter personalities and have sparred with each other in the past — in April, Trump called out Legere for poor cell service in his apartment buildings — so it was really only a matter of time before things reignited,” Mashable’s November 2015 report said.
Entner said he still would expect Sprint’s parent company, Tokyo-based SoftBank Group Corp., to test Washington’s regulatory mood under Trump just as it had under an unreceptive Obama administration. SoftBank CEO Masayoshi Son has publicly acknowledged that his company’s 2013 purchase of Sprint had a second act in a merger with T-Mobile.
Trump’s election and its potential impact on a merger with T-Mobile did not come up Wednesday when Sprint’s chief financial officer Tarek Robbiati fielded questions at a telecommunications industry conference in New York.
Combined, Sprint and T-Mobile would be large enough to challenge wireless giants Verizon and AT&T, Son argued. Instead, Washington said it preferred four national wireless carriers to preserve a competitive environment.
T-Mobile’s success since then, from high-visibility marketing moves to growing its business at the expense of Sprint, Verizon and AT&T, essentially proved the regulators’ point, analyst Bill Ho of 556 Ventures said.
“T-Mobile alone has created that (competitive) situation while Sprint was being turned around,” Ho said. “If you take away the politics how can anyone defend a merger?