T-Mobile US and Sprint merger talks reportedly resumed once more

11 April 2018 | James Pearce

Talks between SoftBank and Deutsche Telekom over merging their US subsidiaries, Sprint and T-Mobile, have restarted, according to reports.

Tim Hottges 160x186The Wall Street Journal claims the long-mooted merger talks have resumed for the third time in four years, citing unnamed sources familiar with the matter.

Reports claim it is Japanese technology giant SoftBank who has initiated this latest round of talks over a deal that would bring together the third and fourth biggest operators in the US, creating a larger third placed player who could compete more directly with the likes of AT&T and Verizon.

Talks over a deal between Deutsche Telekom, which controls T-Mobile, and SoftBank, which controls Sprint, come less than six months after the last attempt at striking a deal broke down. In November, the two companies ended talks after they failed to strike an agreement over the structure a merged unit would take.

The on-again, off-again nature of previous discussions shows that there is no guarantee a deal will be struck, but when Deutsche Telekom walked away from the table last year, CEO Tim Hoettges made it clear talks could resume.

The combined company would potentially have around 127 million customers and would have a market capitalisation of around $80 billion. It would also have a rich spectrum holding as US operators roll into deployments of 5G services. This follows a 20% drop in Sprint’s share price following the collapse of the merger talks in November.

In 2014, after months of talks between Deutsche Telekom and SoftBank the deal was cancelled. At the time, officials kept quiet about the merger talks, but reports claimed the deal was nixed over regulatory concerns.

Reports in November claimed the discussions had stalled over a disagreement about who would control the combined unit. T-Mobile is currently the bigger operator in terms of market share and, under T-Mobile CEO John Legere, has seen significant growth. This is compared to last time talks broke down when Sprint was the bigger player.

The question over who will control a potentially combined unit remains, and until this is resolved, a deal appears unlikely to be struck.