Sprint and T-Mobile in active talks regarding a merger

According to sources, Sprint and T-Mobile are in active talks regarding a merger.

Both companies and their parents, Softbank and Deutsche Telekom, have been in regular discussions relating to a stock-for-stock merger in which Deutsche Telekom, T-Mobile’s parent, would rise as the majority owner.

Sources stress that negotiations are still weeks away from finalizing a deal. They believe that the possibility of reaching an agreement are not assured. Both sides have not yet established an exchange ratio for a deal, but are presently engaged in discussions to hammer out a term sheet.

The companies refused to comment on the report.

Over the years, Sprint and T-Mobile have had a supposedly endless dalliance since Softbank took control of Sprint, driven by the presumption of billions of dollars in cost synergies that a merger would produce. The last time that the two companies held meaningful discussions earlier this year, Masayoshi Son of Softbank showed a willingness to sell Sprint to T-Mobile.

This time, given the all-stock nature considered, Softbank would emerge as a large minority holder in any union. While, John Legere, the CEO of T-Mobile is anticipated to lead any combination that follows a merger, Son has made it clear that he wants a say in how the company is run. The sid desire adds another layer of complexity to an already complicated transaction.

Due diligence on Sprint has not yet been started by T-Mobile, yet another move that could change the current price expectations or the willingness to move forward.

The biggest issue, however, is whether antitrust regulators will approve any merger between the nation’s No. 3 and No. 4 wireless carriers. The chance of rejection by the Department of Justice will represent a significant role in the final resolution made by both sides as to whether they will continue with a deal.

Given the high level of engagement of Softbank on a Sprint-T-Mobile deal, its daring campaign to attempt to acquire Charter Communications has slowed considerably. The effort is on hold. It was reported that it involved the creation of a new company infused with large amounts of equity and debt to purchase Charter at a premium and the 17% of Sprint that Softbank does not own. Should Softbank make a move, Altice, a Dutch telecom company has been soliciting funds actively to mount its own bid for Charter.