T-Mobile/Sprint Agreement?

Softbank Chairman Masayoshi Son has been eager to buy T-Mobile and merge it with Sprint, although the FCC and Justice have had a dim view of such a merger. U.S. regulators previously rejected AT&T’s $39 billion takeover bid for T-Mobile US in 2011.

Now Reuters reports that Germany’s Deutsche Telekom and Softbank have been talking and may have reached some kind of agreement whereby DT would keep a minority stake in a T-Mobile/Sprint deal. Other details such as price and financing remain to be worked out, according to Reuters.

Softbank owns a majority of Sprint, the third largest U.S. wireless carrier, while Deutsche Telekom owns 67 percent of T-Mobile US, which has a market value of $27.6 billion.

One possibility is for Deutsche Telekom to retain a roughly 15 percent in T-Mobile US as part of a deal, the sources said. That would help reduce the size of the equity check that Sprint has to write for T-Mobile US, while giving Deutsche Telekom the chance to benefit from potential synergies.

The FCC’s new Spectrum Cap Rules are also transforming the 600 MHz auction. Perhaps, if such a deal could clear in a year, the combined companies might improve their position in the 600 MHz auction. The FCC ignored Sprint’s arguments and instead weighs all spectrum the same, though the FCC will pay closer attention to deals involving spectrum below 1 GHz.

The 600 MHz auction is vital for both companies, since 600 MHz can fill gaps and penetrate homes.

Dish is the loose cannon. It is still looking for someone to host its 55 MHz of spectrum.

The decision to disallow the merger of AT&T and T-Mobile worked out well for consumers. Justice and the FCC may be reflecting on that success, although a merger of number 3 and 4 does make more competitive sense.

It’s business as usual — while the telecom industry is mutating in real-time. Perhaps more creative deal making should be the rule. Not mergers.

Asymmetric force multipliers like Cloud RAN, small cells, VoLTE, Dish, Google and Facebook are now in the game. The industry (and government) should embrace change, not shut it out.

See Dailywireless; New Spectrum Cap Rules Transforming 600 MHz Auction, Verizon Activates AWS Band, T-Mobile Files 600 MHz Proposal – Eliminating “Free” Spectrum, T-Mobile Buys 700 MHz from Verizon, Battle for 600 MHz: Spectrum Aggregation Limits?

Posted by Sam Churchill on .

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