Sprint Corp (NYSE:S) and T-Mobile US Inc (NASDAQ:TMUS) shares were booming Tuesday on talks of a potential merger.
The two carriers and their parent companies are reportedly discussing a stock-for-stock merger that would unite the number three and number four carriers in the U.S. in order to combine their services and offer more competition to AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ).
The talks are still in their preliminary stages so don’t expect a deal to be inked for at least several weeks. The source close to the matter which reported the talks asked not to be identified.
If a deal were to go through, T-Mobile CEO John Legere is expected to be at the helm of the combined company, although Masayoshi Son, CEO of Sprint parent company Softbank Group Corp (OTCMKTS:SFTBF), also wants an active role in the new combine.
Deutsche Telekom AG (ADR) (OTCMKTS:DTEGY) — which owns about 64% of T-Mobile — would like to have control of the combined company due to the fact that the carrier is responsible for the bulk of the company’s sales and earnings growth. A deal with Sprint would be in the company’s best interests as combining their services could yield revenue growth quickly.
Both companies have declined to comment on the matter.
S stock skyrocketed 8.9% Tuesday on the news, while TMUS shares popped 4.5%.
