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Sprint Slowly Steps Closer to Takover Bid for T-Mobile USA

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The long expected takeover of T Mobile USA by Sprint has reportedly edged a stage closer, with a deal reached between the two company's controlling shareholders, Deutsche Telekom and Softbank.

Deutsche Telekom owns 67% of T-Mobile USA, and is reported by Japan's Nikkei to have agreed to sell 50% of the company for USD16.8 billion in a mix of cash and shares.

The stumbling block appears to still be the issue of the breakup fee, with Deutsche Telekom concerned that T-Mobile would be distracted by the efforts to secure regulatory approval. If such approvals were not forthcoming, then T-Mobile may have lost important momentum in the local market -- hence Deutsche Telekom wants suitable compensation from Softbank.

The regulatory hurdles of a merge of the two mobile networks would be immense, as it would concentrate the market into three large companies, and competition authorities are likely to be very concerned about that level of concentration.

However, a European model of allowing mergers, but extracting concessions such as minimum capacity for MVNOs could be considered in the USA to maintain competition levels, while supporting consolidation in the underlying network infrastructure.

Any such deal between Softbank and Deutsche Telekom is still said to be months away though, and all sides will be sounding out regulators ahead of the expected merger announcement.

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Tags: t-mobile usa  sprint  softbank  deutsche telekom  USA