Sprint merger with T-Mobile about to unravel, two unconfirmed reports say

Conflicting reports Monday left employees, customers and others scratching their head about whether Sprint and T-Mobile still want to merge.

Two unconfirmed reports Monday said Sprint’s long awaited merger with rival T-Mobile is about to unravel, but a third said otherwise.

Hanging on the outcome is the future of 6,000 Sprint headquarters jobs in Overland Park, the business the company does with local vendors and suppliers and the contributions to charity and community those employees and corporate coffers provide.

Nikkei Asian Review reported that SoftBank Group Corp., the Tokyo-based company that owns more than 80 percent of Sprint, plans to end talks with T-Mobile’s largest owner, Deutsche Telekom, as early as Tuesday. The report did not cite any sources.

The Wall Street Journal also posted a report saying SoftBank is “abandoning its efforts to merge” with T-Mobile, citing “people familiar with the matter.”

A third report contradicted the others. CNBC cited unidentified sources to say SoftBank is “not planning to withdraw from the deal.” CNBC’s report did say the deal is running into “governance and pricing issues.”

According to both reports indicating a breakup, SoftBank’s board, which includes Sprint CEO Marcelo Claure, met over the weekend and balked at the prospect of giving up control of the combined companies to Deutsche Telekom. Nikkei said SoftBank’s board decided Monday to “call the talks off.”

Previous reports had said that Masayoshi Son, SoftBank CEO and Sprint chairman, had been willing to cede control of the merged company to get a deal done.

Nikkei’s report said SoftBank was willing to allow Deutsche Telekom to have control “as long as the Japanese company retained some influence.” But SoftBank’s board discussions were about not giving up control.

The Journal reported that one of the people it cited said Sprint, absent a merger, would “make a significant investment in its network.”

None of the companies have acknowledged merger talks, though they have spoken publicly about the many benefits of combining the nation’s No. 3 and No. 4 wireless companies.

Monday’s unconfirmed reports that the deal may be off stirred mixed reactions.

Investment analyst Jennifer Fritzsche of Wells Fargo Securities dashed off a note to clients based on the first reports that the deal was unraveling. She seemed to take the news in stride.

“We had often questioned why Masa Son would give up control if there was no premium reportedly to be paid” as had been reported earlier, Fritzsche wrote.

Fritzsche also noted that ending talks suggests more confidence about Sprint’s future than might seem evident. She wrote that SoftBank’s willingness seemingly “to walk away speaks loudly to the fact S’s (Sprint’s) back is not against the wall.”

Others were less confident in Sprint’s future without a deal with rival T-Mobile.

William Ho, of 556 Ventures LLC, noted that reports suggested that Sprint would receive no premium in the deal, that it would have to cede control and that it would receive no fee if regulators broke up the deal.

“I don’t think T-Mobile or Deutsche Telekom needs it as vociferously as Sprint or SoftBank has always been saying,” Ho said. “T-Mobile’s momentum’s great. ... Sprint is just struggling.”

Shares of both U.S. wireless companies fell on the reports. Sprint shares fell 65 cents, or 9.3 percent, to close at $6.34. T-Mobile shares fell $3.37, or 5.4 percent, to close at $59.58.

This story was originally published October 30, 2017 at 1:08 PM with the headline "Sprint merger with T-Mobile about to unravel, two unconfirmed reports say."