Sprint and T-Mobile back in merger talks, unconfirmed report says
Given up for dead five months ago, merger talks between Sprint and T-Mobile are on again, according to an unconfirmed published report.
The report follows another unconfirmed report in March that Sprint may be rekindling merger plans but with cable operator Charter Communications.
The Wall Street Journal said Tuesday that Sprint and T-Mobile were exploring "a combination for the third time in four years." It cited people familiar with the matter without identifying them.
Sprint and T-Mobile had issued a joint statement in early November that they had called off merger talks.
The terms being discussed last year would have wrested control of Sprint from its parent company, Tokyo-based SoftBank Group Corp. Sprint said SoftBank walked away from the talks to preserve its control over the U.S. wireless carrier that SoftBank considered critical to its plans.
There was no information to indicate whether those negotiation terms had changed or SoftBank's interest in control had changed.
"I wouldn't expect a different outcome, but a different outcome is possible," said Berge Ayvazian, senior analyst at Wireless 20/20.
Ayvazian said SoftBank may have concluded that Sprint's future on its own is bleak and it is ready to give up control since "nothing better has come along" than the previously rejected deal with T-Mobile.
Since November, Sprint's stock price has suffered relative to the stock market and that would make a merger financially more attractive to T-Mobile now, Jefferies analyst Scott Goldman told clients in a note Tuesday.
Restarted talks may be at T-Mobile's behest, according to analyst Jennifer Fritzsche at Wells Fargo Securities. In a note to clients, she said much of the savings expected from a merger were to come from dropping one of the two wireless networks.
Sprint's plans for "aggressive network investment over the next 2 years" would change that outlook, Fritzsche wrote. "Put another way, the more Sprint invests in the network now — the lower that synergy opportunity becomes."
After the talks failed last fall, Sprint CEO Marcelo Claure and SoftBank CEO Masayoshi Son each declared that the Overland Park-based wireless company would invest heavily in its network as a standalone wireless competitor. Sprint has talked about spending $5 billion to $6 billion in the coming year on its network expansion. Merging the companies would save at least $30 billion by most accounts.
The report of possible merger talks lifted shares of both companies. Sprint shares, which had dipped below $5 a share recently, were up 88 cents, or 17.1 percent, at $6.02. T-Mobile shares were up $3.39, or 5.7 percent, at $63.13.
SoftBank originally hoped to add T-Mobile to its U.S. wireless operations shortly after acquiring Sprint but dropped those plans when it became clear federal regulators would not approve a deal.
Separately, Sprint agreed Tuesday to pay $10 million under a settlement reached after federal officials investigated work it had done on its network.
The Federal Communications Commission had looked into whether Sprint and a company it hired, Mobilitie LLC, had completed proper tower registration and environmental and historic impact reviews before doing the work.
"Under the rules in effect at that time, deploying wireless infrastructure facilities, such as communications towers and structures for small cell systems, required environmental and historic preservation reviews, including Tribal consultation, prior to construction of certain facilities. In addition, certain facilities were required to be registered with the FCC prior to construction," an FCC statement said.
Mobilitie agreed to pay $1.6 million in the settlement.
This story was originally published April 10, 2018 at 12:24 PM with the headline "Sprint and T-Mobile back in merger talks, unconfirmed report says."