Five things to know about Sprint’s future
Sprint chairman Masayoshi Son said he sees a merger with T-Mobile as a “first priority” but not the company’s only option in seeking a partner as the telecommunications industry combines.
Son spoke Wednesday during a presentation of SoftBank Group Corp., the Tokyo-based company he founded and leads as CEO. SoftBank owns more than 80 percent of Sprint.
“At this moment, I am open for everything,” Son said, according to SoftBank’s English language version of a session with analysts and reporters in Japan. “T-Mobile would be, in the orthodox manner, the first priority, and I would like to be very sincere in trying to start a negotiation.”
In responding to questions, Son made clear that he remains open to other possible combinations. Analysts have speculated about a wide array of deals since a federal ban against strategic talks among key companies, including T-Mobile, came to an end in late April.
Others reported Son’s comments differently, including a report from the Financial Times that Son said he would seek talks with the rival wireless carrier.
“Our top choice remains T-Mobile. We will be open and sincere as we aim to launch negotiations,” Son said, according to the report by the Financial Times.
“We’re basically open to anything. If there is an opportunity that will lead to industry realignment under better conditions, we will study (each option) with an open mind,” Son said, according to the Times’ report.
A quote from Son published by Reuters said, “Of all potential partners, T-Mobile is the one that would yield the most synergies, the most orthodox choice and we’d sincerely love to begin talks.”
Synergies is a reference to the cost savings that Sprint and T-Mobile could enjoy by eliminating duplication in their businesses and networks under a merger, making them more competitive against their larger rivals AT&T and Verizon. Other possible mergers, such as with a cable company, would generate far fewer savings but may deliver other benefits such as bundling television, internet and traditional phone services with wireless service.
Investment analyst Amir Rozwadowski at Barclays cited other Son comments in a note to clients. He said Son talked about making appointments and starting discussions now that the industry is free to engage in strategic talks.
Rozwadowski also wrote that Son had said a T-Mobile deal could be reached quickly once specific discussions began because the companies know each other so well.
“Given its frankness, it seems clear that Sprint is interested in starting negotiations and seems open to all structures,” Rozwadowski’s note said.
T-Mobile has been considered less eager than Sprint to do a deal, but the companies may be pushed into each others’ arms by a changing landscape around them.
On Monday, cable companies Comcast and Charter Communications said they would cooperate for the next year in launching their own wireless services. Neither has a network but would offer wireless services using Verizon’s network under re-seller agreements with the wireless carrier.
The cable companies also have been seen as potential bidders for either T-Mobile or Sprint as a quick entry into the wireless market. Their agreement prevents either from doing a wireless deal without the permission or involvement of the other for the next year, according to a report by Amy Yong, an analyst at Macquarie Research.
Yong said it was too early to draw conclusions, “but this could motivate T-Mobile and Sprint to pursue consolidation faster.”
Charter’s CEO Tom Rutledge said in the announcement with Comcast that their shared efforts would “enable us to provide more competition and drive costs down for consumers at a similar national scale as current wireless operators.”
It suggests that their joint effort could become a new fourth national wireless competitor should Sprint and T-Mobile seek a merger. Federal officials had said they prefer four national carriers to three when they rejected AT&T’s attempt to purchase T-Mobile in 2011.
Sprint and SoftBank had sought to acquire T-Mobile three years ago but dropped the effort once it became clear that federal regulators in Washington would not approve a deal.
The election of Donald Trump as president in November led many to think a merger might get a warmer reception from regulators.
Sprint shares lost 2 cents Wednesday and closed at $7.88. T-Mobile shares gained 50 cents and closed at $66.