Sprint Mulling Takeover Bid for T-Mobile USA

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Further consolidation in the US telecoms market is possible as Sprint is reportedly mulling a takeover bid for T Mobile USA.

A deal would face considerable regulatory scruitiny though as it would shrink the US market to just three dominant operators -- Sprint/T-Mobile, AT&T and Verizon.

A merged T-Mobile/Sprint would have around 53 million postpaid customers, compared to AT&T (72 million) and Verizon (95 million).

Citing people familiar with the issue, the Wall Street Journal reported that a bid could be launched in the first half of next year, and cost Sprint upwards of USD20 billion, depending on the size of stake it eventually bids for.

Although Sprint has been struggling, it is now backed by Japan's Softbank and is expected to be able to finance such a takeover bid.

Any such bid is likely to face howls of protest from consumer rights groups and anti-trust regulators concerned that a lack of competition could push prices upwards. The level of concessions needed to push the deal through could leave the company no better off than before the merger.

Sprint also has a bad reputation when it comes to mergers following the botched takeover of Nextel, which was later largely written off.

However, with Verizon distracted by its buyout of the Vodafone stake, and AT&T repeatedly rumoured to be eying overseas acquisitions, the timing for a T-Mobile/Sprint merger could never be better for the two companies.

Germany's Deutsche Telekom is still the majority owner in T-Mobile USA, so any deal would have to be a friendly merger rather than a hostile takeover.

T-Mobile USA's shares jumped on Friday on the report.

On the web: Wall Street Journal

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Tags: t-mobile usa  sprint  softbank  USA 

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