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Sprint Still Mulling Takeover Bid for T-Mobile USA

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USA based Sprint is said to be pushing ahead with plans to launch a takeover bid for T Mobile USA, despite increasing regulatory disquiet about such a deal.

Citing people familiar with the matter, Bloomberg News reported that Sprint's CFO, Joe Euteneuer met with six banks to ensure that the company would be ready with financing structures if it decides to pursue a takeover.

No financing commitments have been signed, and the company is still deciding how to pay for the deal.

One factor which could make the deal more affordable would be a stock merger, as T-Mobile USA is 67% owned by Germany's Deutsche Telekom who have been open to stock mergers in the past, as it did with the MetroPCS transaction.

Rumours that the German shareholder is preparing to sell its stake were heightened earlier this year when the company shifted its T-Mobile USA stake from its German holding company to a Netherlands based one.

The transfer of the 67% stake from Germany to the Netherlands could be seen as a sign that a sale is being considered, as the Netherlands has more favourable tax rules covering corporate asset sales. The tax situation is one of the reasons why so many companies base their holding companies in that country.

Regulators are also known to be concerned about such a merger, which would reduce the US market to effectively three large players -- AT&T, Verizon and Sprint/T-Mobile.

Actions by the telecoms regulator to revamp how it calculates radio spectrum holdings could also pile pressure on Sprint, which would see its regulated holdings increase sharply, and would be far in excess of permitted limits following a T-Mobile deal.

Those concerns not withstanding, Japan's Softbank, which owns 80 percent of Sprint is expected to back a takeover bid, with the offer being made in June or July.

On the web: Bloomberg News

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Tags: t-mobile usa  sprint  softbank  USA