Could Sprint And T-Mobile Be Joining Forces?

Sprint and T-Mobile are in preliminary talks surrounding a potential merger. The two mobile powerhouses began talking about a potential merger in 2014, but it fell through due to regulatory concerns. Although it will still be difficult to get approval for a merger of this magnitude, there is a much greater chance that it passes under President Donald Trump’s administration. One major difference between the talks in 2014 and the ones going on now is the company that would hold the controlling interest of the super-carrier. In 2014, Sprint and parent company SoftBank were aiming for a controlling stake in the company; however, all indications point to T-Mobile’s parent company Deutsche Telekom being in charge if the deal were to go through this time around.

Sprint’s Desperation

Sprint has fallen to number four among the top wireless carriers in the nation, and frankly, they are in desperate need of business partner. The company has posted losses for ten years straight, even after SoftBank took over control in 2013. While SoftBank reestablished Sprint’s subscriber growth, the wireless carrier still has more than $12 billion in debt that will be due within the next three fiscal years. That puts SoftBank and billionaire CEO Masayoshi Son in quite the bind. Essentially, they need to find another company to merge with or will most likely need to file for bankruptcy sooner than later. Negotiations with Comcast Corp. and Charter Communications Inc. have halted, prompting the resurrection of merger discussions with T-Mobile.

Industry Competition

T-Mobile and Sprint currently rank third and fourth in United States subscribers, which is a big reason why the Justice Department and the Federal Communications Commission are so hesitant to approve the merger. The source of the issue is competitive balance, siting that the merger would create less options for users. Nevertheless, the combination of Sprint and T-Mobile subscribers would not even match that of Verizon and AT&T, the top two wireless providers. The deal would eventually need to be approved by the Department of Justice, which means that this deal will probably not go into effect anytime soon, if at all.