Recent reports claim that Sprint Corp (NYSE:S) and T-Mobile Us Inc (NASDAQ:TMUS) are once again talking about a possible merger.
These talks are starting up again after last coming to an end in November. The recent reason for the renewed talks appears to be concerns from the companies about investing in their own networks.
As wireless companies prepare to move on to 5G, Sprint and T-Mobile would have a hard time investing in their networks for this upgrade. However, a merger of the two companies could help them overcome these issues by reducing cell towers and splitting the burden.
Sprint and T-Mobile are reportedly only in the early stages of talks about a merger. Some issues that they face include possible interference from regulators. This happened back in 2014 when the Obama administration got in the way of a previous merger plan. However, the Trump administration may be willing to let a merger go through.
Another issue that a possible merger between Sprint and T-Mobile could face are control concerns. Deutsche Telekom has a 63% stake in the company and is likely looking to keep control of it. However, it would have to invest more to keep that stake if a merger with Sprint were to go through. It may not want to make the additional investment into TMUS, reports Reuters.
“T-Mobile U.S. remains Deutsche Telekom’s main growth asset and the parent is unlikely to cede control of the business absent a large premium,” Bloomberg Intelligence’s John Butler said in a statement on Tuesday.
S stock was up 1% and TMUS stock was up slightly as of Wednesday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.
