Rumors of an impending Sprint acquisition of T-Mobile have swirled for months as America's two underdog carriers have engaged in a not-so-private courtship, and it appears an announcement may be close, if you're inclined to believe Bloomberg.
The deal would allegedly value T-Mobile around $30 billion ($31.3 billion to be precise), though an exact agreement hasn't been reached as to a number. T-Mobile carries a little under $15 billion in debt and over $5 billion in cash, meaning Sprint's new parent firm Softbank will take on even more debt in an attempt to fortify a position against American wireless heavyweights AT&T and Verizon.
The deal would have to pass through the FTC and FCC before approval, hurdles that are by no means small when you're talking about an industry comprised of only four major national players across the whole of the US. Reducing that number to three could have repercussions that may not favor consumers or competition generally, so I wouldn't expect the feds to let this one slide without a second glance.
It's easy to see this as a potential repeat of what happened with AT&T and T-Mobile nearly three-and-a-half years ago, after regulators were unwilling to consider a merger, citing concerns of competition. (Of note, the T-Mo / Sprint deal will also carry a termination fee like the one AT&T paid after its deal collapsed.) The difference with Sprint? Already being an underdog, Sprint and Softbank will likely try to convince regulators that the merger will increase competition by providing AT&T and Verizon a real competitor at the national level, forcing them to lower rates and increase customer satisfaction to avoid losing subscribers. It's a tempting viewpoint, especially considering T-Mobile and Sprint have historically been the most aggressive carriers in terms of focus on value to subscribers, whereas AT&T and Verizon have tended to charge based on the reach of their networks and handset lineups (the latter advantage being one that has all but disappeared in recent years).
The T-Mobile faithful, too, are unlikely to take this news sitting down - the Uncarrier has developed a large group of subscriber-evangelists on the web touting the company's commitment to customers, value, and freedom of choice. Those are words you don't often hear associated with a wireless carrier. While Sprint has an "unlimited forever" commitment to its own customers, the carrier's lackluster infrastructure (owed in part to the major gaff that was WiMAX) and poor financial performance are reasons to be apprehensive about a deal. Still, Sprint's massive collection of wireless spectrum along with the leadership of Softbank CEO Masayoshi Son are worth considering. The ingredients for a supercharged next-generation wireless carrier are there, and a merger with T-Mobile could be just the thing Sprint needs to kickstart those ambitious plans.