T-Mobile U.S. Inc and Sprint Corp intend on announcing a merger agreement without any immediate sale of assets. The third and fourth largest U.S wireless carriers are preparing a negotiating strategy to tackle demands from regulators regarding asset sales, including the divestment of some of their spectrum licenses after their deal is announced.
The combining the two wireless carriers would form a business with over 130 million U.S. subscribers, not far behind the two largest carriers Verizon Communications Inc and AT&T Inc. The companies’ statement of a merger agreement is anticipated for late October or early November. The agreement will place emphasis on the advantages this deal can bring to U.S. consumers, which include the development of next-generation 5G wireless technology.
T-Mobile and Sprint have both declined to comment.
“It is better for Sprint and T-Mobile to listen and learn the concerns of regulators first, and see whether there is anything that can be done to address those concerns,” research analyst Craig Moffett stated.
Companies typically do not make pre-emptive announcements on divestitures when announcing mergers. Yet, some media and telecommunications agreements have been revealed with divestitures, like U.S. cable operator Comcast Corp’s anticipated occupation of Time Warner Cable back in 2014, which was then later called off due to a regulatory unfavorable response. Companies also typically place caps on the size of divestitures they are willing to accept during negotiations with regulators. T-Mobile and Sprint have not yet agreed to include a cap in their merger agreement.
John Hodulik, research analyst, believes the U.S. Federal Communications Commission probably will force T-Mobile and Sprint to make divestitures of spectrum because the combined company now would have the greatest airwaves, ahead of Verizon’s and AT&T’s holdings. Having access to an abundance of spectrum is very important for the 5G wireless subscriptions AT&T and Verizon anticipate launching to compete with high-speed Internet from the cable companies.
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Since T-Mobile and Sprint neglected their former effort of combining in 2014 along with regulatory concerns, they now believe that the U.S. antitrust enforcement environment has become more promising.
Since last month T-Mobile and Sprint were close to agreeing provisional merger terms and investors have since been waiting for the deal to be formally announced.
Japan’s SoftBank Group Corp, which runs Sprint, and shareholders will own around 40 percent of the combined company. T-Mobile, the majority owner Deutsche Telekom AG and the rest of the T-Mobile shareholders will own the rest.
Although, it is possible that the negotiations will cease between T-Mobile and Sprint like in 2014.