American T-Mobile Considers Acquiring Competitor Sprint

The American company Deutsche Telekom’s T-Mobile is considering acquiring the competing company Sprint, after Japanese SoftBank announced it is ready to sell its majority stake in the company, Reuters learned from a source familiar with the matter.

The latest negotiations followed the earlier announcement this year that SoftBank is willing to relinquish its controlling stake in Sprint to facilitate a merger with T-Mobile while retaining only a minority stake in the combined company.

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Sprint and T-Mobile, which is majority-owned by Deutsche Telekom, are still weeks away from an agreement, and they have not yet agreed on the share exchange ratio nor have they begun conducting due diligence on the companies, the source added. However, the companies have agreed that T-Mobile’s CEO John Legere would lead the combined company if a merger occurs. Neither Sprint nor T-Mobile responded to a request for comment.

Sprint’s shares jumped 8.2 percent, while T-Mobile’s shares rose nearly 5.3 percent after CNBC first reported the news of progress in the negotiations.

Despite the potential risk of disrupting market competition, investors have long anticipated a deal between T-Mobile and Sprint, the third and fourth largest telecommunications operators in the U.S., hoping for cost savings and other synergistic effects.

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Three years ago, SoftBank abandoned negotiations for the acquisition of T-Mobile and its merger with Sprint due to opposition from the U.S. antitrust regulator.

Since then, T-Mobile has surpassed Sprint in market capitalization. While T-Mobile’s value is estimated at around $51 billion, Sprint’s market value is approximately $34 billion.