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T-Mobile’s Plan to Buy Sprint to Face Serious Issues

T-Mobile’s Plan to Buy Sprint to Face Serious Issues

Several analysts have already voiced out their comments and opinions on T-Mobile’s plan to buy Sprint again which is worth about $26 billion.

Based on the details of the deal, T-Mobile will own about 41.7% stake of Sprint. 27.4 percent of the combined telecom business will be owned by Softbank, and the remaining 30.9% will be publicly owned. However, the deal also shows that Softbank won’t have an easy way of getting out from Sprint which has already accumulated around $32 billion in debt.

According to Jonathan Chaplin, an analyst at New Street Research, the CEO of Softbank, Masayoshi Son, has previously rejected T-Mobile’s deal around four months ago. He further said that that particular deal was significantly better for Softbank compared to the deal that the company is taking right now.

Telecom regulator FCC and some other agencies have two primary concerns in this issue. They have voiced their apprehensions about the presence of Softbank of Japan and Deutsche Telekom of Germany, two foreign companies clawing their way to the US wireless market.

However, according to some analysts, the FCC shouldn’t hold back on the deal that T-Mobile is making with Sprint. They stated the fact that another foreign company, Vodafone Group from the UK, has a massive stake in the US’s number one wireless operator, Verizon Wireless.

A previous merging attempt back in 2014 was stopped because of the regulatory opposition, especially from the Obama administration. According to the principal research analyst at IHS Markit, Seth Wallis-Jones, there is a significant possibility that the latest deal will face, yet again, a series of regulatory hurdles.

Steve Vachon, a TBR analyst, also said that the strongest possible barrier for the deal to go through will be the negative effects of the reduced wireless competition despite T-Mobile claiming that the merger will allow customers greater cost savings.

Furthermore, approving the deal would mean disruption of the pay TV industry, as the merger would have a significant wireless subscriber base to which cross-selling of the Layer3 TV video platform would be possible. This would result in greater loss for cable providers.

According to Simon Flannery, a Morgan Stanley analyst, the lack of a breakup fee in T-Mobile’s plan to buy Sprint is a definite suggestion that both companies are willing to give it a go from a supervisory point of view.

Adam Alderson
the authorAdam Alderson
Adam is an aspiring writer and an artist who plays with his band on the weekends. He loves to write about cord cutting and digital industry focused articles. His favorite movie is "Home Alone". He loves watching his home team Birmingham City FC play while listening to House Music. Favorite Teams - Basketball: Spurts, Football: NY Jets, Soccer: Birmingham City FC.

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