T-Mobile USA-Sprint merger: What to expect of the deal in post-election phase?

Wednesday, October 3rd, 2012 5:40:36 by

Mergers and Acquisitions are a real burden to smaller companies these days as the government blocks any of such efforts made or the economy does not allow the companies to strike a deal with each other. Consolidation in wireless firms is in talks these days and the latest development in the relations between T-Mobile USA and Sprint Nextel has grown to be rife.

Both companies were rumoured to merge together in the US to compete with bigger players like AT&T and Verizon Wireless. Their attempt to join hands was first blocked by the Federal Communications Commission last year. However, technology gurus were of the opinion that both companies might merge together latter this year after the US presidential elections.

The latest build-up in the affair has been the intrusion of MetroPCS, the fifth largest carrier in the US. T-Mobile USA is planning to take MetroPCS aboard in the country shortly after the elections on November 6. This does not bode well for the relation between Sprint and T-Mobile.

In terms of subscribers, Sprint is third largest carrier in US, followed by T-Mobile USA, who is trailed by MetroPCS. The acquisition of MetroPCS will certainly be of great significance to T-Mobile but the alleged merger between Sprint and T-Mobile will fall apart as a result.

“A PCS/T-Mobile deal would likely be seen as a negative for Sprint, as it means Sprint and T-Mobile were unable to reach a deal,” UBS analyst John Hodulik said in a report.

The Sprint-T-Mobile merger has differing views from experts regarding a possible response from the regulators after the elections. Some say the republicans will make it difficult for both of them, should they come to an agreement, but some are of a different mind.

“Whatever regulatory hurdles that Sprint would face in combining with T-Mobile would be dramatically higher,” Bernstein Research analyst Craig Moffett said.

On the other hand, Paul Gallant, an analyst at Guggenheim Partners had to say this:

“An Obama II FCC (would) continue the current effort to boost smaller wireless players. Deals among underdog wireless firms — including a Sprint-T-Mobile deal — likely would be approved.”

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