) is reportedly nearing an agreement to acquire
T-Mobile US Inc.
). According to Bloomberg, the company is expected to pay around
$40 a share to acquire T-Mobile US, which represents a total
valuation of $31 billion.
We believe the prospective deal should bring meaningful
synergies to Sprint and help stabilize its financials and market
share in the wireless industry.
Sprint plans a stock-and-cash deal split equally for T-Mobile
US. Alongside, it also seeks to offer a 15% stake holding in the
combined company to Deutsche Telekom AG - parent company of
T-Mobile US, which currently holds a 67% stake in the latter.
Although nothing has been officially announced as yet, the deal is
reportedly expected to take place as early as July this year.
For Sprint, the merger with T-Mobile US implies a gain of over
100 million customers. The deal will also place its parent company,
SoftBank in a much stronger position as opposed to major carriers
Verizon Communications Inc.
The merger will give birth to a new entity that will likely be
the second largest carrier in the world in terms of revenues,
surpassing global giant Vodafone Group . It will also give the
Japanese carrier, Softbank a shot in the arm, with a solid foothold
in the world's largest economy.
However, Sprint's ambitious plan has raised quite a few eyebrows
in the U.S. telecom industry's regulatory body. According to
previous reports, antitrust officials at the U.S. Department of
Justice have expressed their contempt toward the T-Mobile and
As a result, we believe skepticism on the part of the regulators
is the biggest hurdle that Sprint needs to overcome in the coming
days, in order to make this deal a success.
Sprint currently has a Zacks Rank #3 (Hold).
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