Sprint Working on Potential T-Mobile US Purchase

Sprint is preparing a possible bid for T-Mobile US, reports The Wall Street Journal. If permitted by antitrust regulators, a potential merger between the two companies would result in just three major carriers in the United States.

Sprint is studying regulatory concerns and could launch a bid in the first half of next year, the people said. A deal could be worth more than $20 billion, depending on the size of any stake in T-Mobile that Sprint tries to buy.

Sprint hasn’t yet decided whether to move ahead with a bid. Going forward despite regulators’ concerns would be highly risky. Any pursuit of a bid by Sprint could be aimed at testing antitrust officials’ reaction to a deal, and a bad reaction could put an end to the effort.

Currently, T-Mobile US, which operates under the T-Mobile, MetroPCS and GoSmart brands, is the fourth largest carrier in the United States with 45 million customers. Sprint is the third largest carrier with 54 million customers. Combined, the two companies would be come close to reaching the subscriber numbers of the larger carriers in the U.S., Verizon and AT&T, at 119 million and 108 million customers each, respectively.

Both Sprint and T-Mobile have struggled to keep up with competitors like Verizon and AT&T, which have installed much larger LTE networks. A merger between the two companies would likely see significant service improvements for customers, due to a larger network infrastructure.

It is unclear whether such a merger would be permitted, as AT&T previously tried to purchase T-Mobile US in 2011. The Federal Communications Commission and the Department of Justice both made moves to block the transaction, putting an end to the acquisition. AT&T had planned to pay $39 billion in cash and stock for the company.

According to the report, Deutsche Telekom AG, which owns approximately 67 percent of T-Mobile US, is looking to exit the U.S. market.