Jan 07, 2017 09:08 AM EST
T-Mobile And Sprint Merger Back On The Table; Analysts Say Deal Unlikely To Happen [Video]
If T-Mobile CEO John Legere is to be taken at his word, The long rumored Sprint and T-Mobile merger may not be dead even in a Donald Trump Presidency, though analysts are saying the merger makes sense, it is unlikely to happen.
T-Mobile and Sprint merger rumor resurfaces
Following announcements regarding T-Mobile at CES 2017 in Las Vegas, Legere was asked during a Q&A about new rumors making the rounds regarding Sprint and T-Mobile joining forces in a merger. He responded that it does make sense for T-Mobile and Sprint to come together but he also noted that any cable operator who would want to go into the mobile business might acquire Sprint.
The merger of the country's third and fourth largest carriers have been rumored for years wherein a deal valued then between $31 billion and $50 billion was nearing culmination but was killed off in 2014 by the Obama administration's Federal Communications Commission (FCC) and the Justice Department citing concerns about too much consolidation in the wireless industry, USA Today reported.
SoftBank CEO Masayoshi Son, regarded by Legere as one of the most powerful men in the world, reportedly had a meeting with Trump last month. SoftBank, Sprint's parent company, is planning to invest $50 billion into the U.S. economy, The Verge reported. According to Trump's announcement after the meeting, SoftBank's investment will generate an additional 50,000 jobs.
The 45-minute meeting at the Trump Tower might have included talks regarding Sprint's plan to merge with T-Mobile, which might mean, talk about the planned deal might be back on the table. However, at the time of this writing, no party has issued any official statement.
Analysts say that though the merger is viable, there are significant obstacles. Sprint is heavily indebted at over $31 billion making the company resort to mortgaging core assets and cutting costs to improve liquidity. SoftBank's hands are also tied after announcing a $32 billion deal to purchase British chipmaker ARM Holdings earlier this year.
Furthermore, Walter Piecyk, an industry analyst at BTIG Research points out that Deutsche Telekom, who is a controlling shareholder of T-Mobile, is not interested in selling its stake in the company.