Softbank Ready to Accept Minority Control If Sprint Corp (NYSE:S) and T-Mobile US Inc (NASDAQ:TMUS) Merge

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A story published by Reuters indicates that a merger between Sprint Corp (NYSE:S) and T-Mobile US Inc (NASDAQ:TMUS) is being reconsidered. According to the report, the chairman of SoftBank, and by extension Sprint, Masayoshi Son is open to selling Sprint to T-Mobile US. He has, however, insisted on retaining a minority stake.
 
At present 83% of Sprint is controlled by SoftBank. Deutsche Telekom owns a 65% stake in T-Mobile US after its initial stake was diluted in 2013 when the German-based telecommunications giant acquired MetroPCS.

Auction rule bans talks between competitors

Currently, the two firms can’t enter into any negotiations until April when an anti-collusion rule banning discussions between rivals ends.
 
The merger between Sprint and T-Mobile US has been years in the making. In 2014, SoftBank’s chairman tried to lobby with regulators to allow the deal but did not succeed. Speculation about a revived merger talks gained momentum last year following the coming to power of Donald Trump during which time SoftBank pledged to invest approximately $50 billion in the United States. The change of leadership at the U.S. communications regulator was also another factor that added fuel to the rumors.

Not selling

Previously, Sprint had the upper hand but the success of T-Mobile US in recent years has seen Deutsche Telekom desire more control over its improving U.S. unit. In 2016, Tim Hoettges, the chief executive officer of Deutsche Telekom asserted that the parent company was not interested in selling its U.S. business.
 
Just like he had stated in various other forums, Hoettges discouraged any views that DT would be selling its U.S. business in a quarter three conference call last year.
 
“…The U.S. market is quite attractive and the outlook is quite encouraging and the share price is reflecting this. This is the right market to be in,” said Hoettges in a conference call.
 
If the merger comes to pass, the resulting entity would be just as big as AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) with regards to the subscriber base.
 
On Friday, shares of Sprint Corporation jumped by 3.28% to close the day at 9.30 a share.

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