Deutsche Telekom Spikes on T-Mobile/Sprint Merger Speculation

Deutsche Telekom Spikes on T-Mobile/Sprint Merger Speculation

Andrew Cummings
September 19, 2017

Bloomberg and CNBC reported the essence of the proposed merger in stories with unnamed sources who they said were close to the negotiations. Shares of T-Mobile are up almost 12%, while Sprint shares are down about 2% and the S&P 500 index are up close to 12%. A deal with Sprint would be in the company's best interests as combining their services could yield revenue growth quickly.

A Sprint spokesman did not immediately respond to a request for comment about the media reports.

S stock skyrocketed 8.9% Tuesday on the news, while TMUS shares popped 4.5%.

Nothing is official just yet, but it appears that this could be an all-stock deal for T-Mobile and Sprint.

Chairman of Sprint-owner SoftBank, Masayoshi Son, and Deutsche Telekom Chief Executive Tim Hoettges, which owns T-Mobile, told investors following the hold to expect talk of industry consolidation, and T-Mobile said it expected to be involved. This would make Sprint-owner, SoftBank a large minority owner in the combined company. Meanwhile, T-Mobile CEO and pink clothing collector John Legere would be the presumed head of the combined company.

Reuters reported in February that SoftBank was prepared to give up control of Sprint to T-Mobile to clinch a merger of the two US wireless carriers.

T-Mobile and Sprint have had a seemingly endless dalliance over the years since Softbank took control of Sprint, pushed by the prospect of billions of dollars in cost synergies that a merger would bring. The deal would have to be approved by the Department of Justice, which would no doubt include a lengthy review process and a highly probable risk of rejection.

Of course, even if such a deal could be struck, the marriage of two of the nation's largest wireless companies would undoubtedly have regulators salivating.

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