As reported in our last blog post, it had been long speculated, with increasing intensity, that T-Mobile and Sprint were close to announcing a merger between the two companies. However, on Saturday, T-Mobile and Sprint announced that the rumored merger was off. This merger would have been consistent with the trend towards deregulating the telecommunications industry that we have been expecting under the new administration.
T-Mobile and Sprint are respectively the third and fourth largest domestic wireless carriers, and the merger would have allowed the companies to better compete against AT&T and Verizon. The two companies previously came close to announcing that they were merging in 2014 but ultimately did not proceed because of regulatory concerns.
Word in the industry is that the deal fell apart this time because the two companies disagreed over the ownership structure. There were also disagreements as to how much the deal would be worth. According to a joint statement issued by the companies, merger negotiations stalled because the companies “were unable to find mutually agreeable terms.”
The companies currently find themselves in two different positions. T-Mobile is in a better position to remain as a stand-alone company, whereas Sprint is in the process of restructuring and has tried to cut costs to reduce its significant debt. The merger would have allowed Sprint to better invest in its network infrastructure and compete in the marketplace.
While a merger would have given T-Mobile and Sprint a competitive advantage, critics were concerned that having three players (instead of four) would hurt consumers. Moreover, there was question whether the deal would ultimately be approved given its antitrust implications. It remains to be seen where both companies will go from here.