Boston, MA 02/04/2014 (wallstreetpr) – The merger of Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) is looking to be more far fetched with each passing day. Once mooted as a plan to counter AT&T Inc (NYSE:T) and Verizon Communications Inc (NYSE:VZ), the company seems unable to convince regulators about the need.
The Planned Merger:
The planned takeover of T-Mobile US Inc (NYSE:TMUS) by Sprint Corp (NYSE:S) appears to make good sense on paper, at least from the financial point of view. It will lead to consolidation as as competition between the two will stop, also lead to increase in rates. The regulators are not looking at the financial aspects at all. They are worried about the level of competition. With fewer players left in the field, rates are bound to increase and the FCC (Federal Communications Commission) will not like it at all. In fact the Justice Department is also not very keen it seems. And the top honchos at Sprint are working hard to convince both the crucial departments and try to take them on their side. The proposal is to acquire Deutsche Telekom’s 67% share in T-mobile for a reported $20 billion. A similar proposal by AT&T has already been rejected.
Competition Heats Up:
It is all a numbers game. And the growth in both companies may well be the undoing. T-mobile has already upped the ante and is trying to lure the smartphone consumers from rival carriers by offering attractive discounts. AT&T has responded in kind. It is exactly this kind of competition that Sprint and its 80% major stake holder Softbank wants to avoid.
With Sprint Corp (NYSE:S) set to declare fourth quarter and full fiscal 2013 results on February 11, 2014, the management seems to be pushing to get approvals from both the departments. Though unconfirmed, there are reports that some top executives of Sprint are meeting FCC officials to take their case forward. It remains to be seen if the FCC officials also share the same enthusiasm, history suggests they may not.
