SoftBank Conceding Sprint To Help A T-Mo Merger

Lynne Hanson
February 18, 2017

CNBC reports that Softbank still has goals of a Sprint / T-Mobile merger becoming a valid number three carrier in the USA and it has a novel way of getting it to happen this time: giving control of Sprint to Deutsche Telekom and becoming a minor partner in a new combined network.

The deal has been long awaited, and now it appears things are moving in the right direction after Reuters reported Softbank is looking to approach T-Mobile regarding a possible merger. Once the auction ends, though, it's expected that SoftBank and Deutsche Telekom will begin negotiations about a possible deal. But the agency's new chairman Ajit Pai is viewed as more business-friendly by the industry.David Balto, a veteran of the Federal Trade Commission now in private practice, said that Sprint and T-Mobile would likely try to sell their merger to skeptical regulators by arguing that a bigger No. 3 would be able to take advantage of economies of scale and bring innovations to market quicker. Which has led to some people saying that SoftBank may give up control of Sprint to Deutsche Telekom, which is a bit of an interesting turn of events, to say the least.

SoftBank first attempted to acquire T-Mobile in 2014 but abandoned those efforts after experiencing pushback from US regulators.

So why the new effort to merge Sprint and T-Mobile?

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At the time, USA antitrust officials reportedly told Sprint that having four national carriers in the United States was important to maintaining a competitive market.

With T-Mobile's success in the last few years, Deutsche Telekom's Chief has shared they won't consider giving up a majority of T-Mobile. Rivals Verizon and AT&T have been recording profits magnitudes higher than Sprint and T-Mobile. In a meeting with then President-elect Trump in early December, SoftBank Chief Executive Masayoshi Son pledged to invest $50 billion and create 50,000 jobs in the United States.

This would effectively merge Sprint and T-Mobile, but what the outcome of that is remains unknown.

Other reports by TheDailyFarc

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