T-Mobile, Sprint Talks Resume on Tortuous Road to Potential Merger

Since 2014, Sprint and T-Mobile have conducted on-again, off-again merger talks. Sprint parent Softbank recently balked on a merger agreement, but the talks are reportedly on again.

Sprint.TMobile

The on-again, off-again merger talks between mobile carriers T-Mobile and Sprint have reportedly resumed after T-Mobile parent company Deutsche Telekom submitted a revised proposal.

The new DT proposal comes six days after Masayoshi Son, CEO of Sprint parent SoftBank disclosed on Oct. 27 that his board of directors had rejected an earlier merger proposal reportedly because it didn't want to give up management control of Sprint, even though DT was acquiring majority interest in the carrier. The latest merger proposal was reported by The Wall Street Journal on Nov. 2, based on unnamed sources who are familiar with the negotiations.

For its part, DT wanted to have a controlling interest in the surviving corporation mainly because T-Mobile has dramatically out performed Sprint in recent years to the point that it went from being the smallest of the major U.S. carriers to third place.

A T-Mobile-Sprint merger would put the combined company more on par with its two biggest competitors, Verizon and AT&T, in terms of subscribers and revenue.

While the terms of the latest offer were not disclosed, it would be just the latest chapter in the intermittent merger talks that the two carriers have engaged in since 2014.

Leaders of both companies appear to want to see the deal through, while negotiations could still be prolonged until they reach an agreement acceptable to both companies.

John Legere, the CEO of T-Mobile, talked with Sprint CEO Marcelo Claure about the negotiations on Nov. 1 "after a T-Mobile board meeting in New York where directors agreed to renew their overtures to Sprint to keep the deal alive," one of the sources told the Journal. Legere also Claure that T-Mobile  Deutsche Telekom didn't want the deal to collapse, story continued.

Sprint, which is the smaller of the two companies, had sought to be acquired by T-Mobile in a stock swap with DT. Sprint needs the merger to stem significant losses in revenue and in mobile subscribers.

While on and off again merger talks have been going on between Sprint and T-Mobile for years, the latest rounds of talks appear to offer the best chance of succeeding.

Son started promoting resumption of merger talks in May apparently in hopes that the election of President Donald Trump might bring about a more relaxed regulatory environment in the telecommunications industry.

Earlier talks had failed in part because U.S. regulators expressed concern that a merger of two of the top four U.S. mobile carriers would result in an unacceptable concentration of market power.

However, Son suggested in May that a merger of Sprint with T-Mobile would be critical to making both companies more competitive in a U.S. wireless business dominated by Verizon Communications and AT&T.

Sprint has been losing money each quarter for more than a decade as it fights to compete in a tough U.S. cellular market against its main rivals.