The last few weeks have seen shares of both T-Mobile and Sprint improve, partly thanks to some rumors that the two major US wireless carriers are looking to merge under the upcoming administration of President-elect Donald Trump. Industry watchers believed that a merger between the two mobile operators was unlikely to happen under President Barack Obama’s reign, but that could change with Trump as the leader of the free world. However, the folks at Cowen and Company Equity Research are saying that the merger is far from a sure thing.
Rumors about a merger between two of the biggest wireless carriers in the United States (T-Mobile is third and Sprint is fourth behind industry leaders Verizon Wireless and AT&T) have been circulating for some years now. About four years ago, SoftBank spent over $20 billion in order to purchase a controlling interest in Sprint, and the Japanese telecoms giant had originally looked forward to buying T-Mobile, too, and then merge the two wireless carriers to form an entity that would give Verizon and AT&T a run for their money. That plan never materialized -- American regulators did not agree to the merger and put an end to it.
A T-Mobile-Sprint merger would certainly be interesting, to say the least. Despite some slowed growth in the wireless industry, T-Mobile has actually managed to grow stronger, which makes it more appealing as a potential target to acquire. Intriguingly, T-Mobile is open to more opportunities that would allow it to become bigger than it already is. Deutsche Telekom, which owns T-Mobile, has long explored ways in which it can offload its US based mobile operator, but earlier in 2016, it took a break from that in order to put most of its attention on the incentive auction.
But with Trump in power, could a T-Mobile-Sprint merger happen? Various investors have pointed out that the two new Federal Communications Commission (FCC) advisors that the President-elect has appointed may be more open to the idea, at least when compared to Obama’s time. Although Trump has expressed his intentions of stopping AT&T’s move to acquire Time Warner, there seems to be no clear indication of his exact views on the subject of mergers between two carriers, as explained by Cowen and Company via a research note. Many see Trump’s upcoming presidency as a game changer in more ways than one, and there is no doubt that those in the wireless industry are also sort of trying to figure out what will happen next.
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