Sprint, T-Mobile merger not expected before September: sources

Tue Jul 29, 2014 2:12pm EDT
 

By Marina Lopes, Soyoung Kim and Liana B. Baker

WASHINGTON/NEW YORK (Reuters) - The long-anticipated merger of Sprint Corp (S.N: Quote) and T-Mobile US Inc (TMUS.N: Quote) is not expected to occur before September, with the companies continuing due diligence and preparing a detailed case for a deal before U.S. regulators, according to people familiar with the matter.

Japan's SoftBank Corp (9984.T: Quote), which controls Sprint, and T-Mobile owner Deutsche Telekom AG (DTEGn.DE: Quote) have agreed to broad terms of a deal, under which Sprint would pay around $40 per share for T-Mobile, valuing the smaller rival at nearly $32 billion, Reuters reported in early June.

Despite agreeing to other key terms such as break-up fees, the proposed transaction is taking extra time to finalize, partly because the companies are keen to bulletproof their arguments for a merger that is sure to face heavy regulatory scrutiny, two of the people familiar with the matter said on Tuesday.

All the people asked not to be named because the discussions are private.

Representatives for Deutsche Telekom could not be immediately reached for comment, while representatives for Sprint, T-Mobile and SoftBank declined to comment.

Analysts see the regulatory challenge as the biggest hurdle facing the companies since both the U.S. Federal Communications Commission (FCC) and Department of Justice (DOJ) have expressed a desire to have at least two more network operators competing against the market leaders AT&T (T.N: Quote) and Verizon (VZ.N: Quote).

SoftBank Chairman Masayoshi Son has argued to U.S. regulators that a merger would give the companies leverage to compete against the two dominant rivals. A combined Sprint-T-Mobile would boast more than 100 million subscribers, still behind both Verizon and AT&T.

SoftBank is also likely to argue that the huge pending mergers of Comcast Corp (CMCSA.O: Quote) with Time Warner Cable Inc (TWC.N: Quote), and AT&T with DirecTV (DTV.O: Quote), would further marginalise Sprint and T-Mobile.   Continued...

 
T-Mobile CEO John Legere announces the T-Mobile Test Drive at his company's Uncarrier 5.0 event in Seattle, Washington June 18, 2014.  REUTERS/Jason Redmond