Sprint is reportedly plotting a move to acquire rival T-Mobile in a deal that, if approved, could help the two carriers gain some significant ground on U.S. market leaders AT&T and Verizon.
According to a report from the Wall Street Journal citing people familiar with the matter, Sprint could launch a bid for T-Mobile as soon as the first half of 2014. The deal could be valued at more than $20 billion, according to sources.
Sprint declined CRN's request for comment, citing company policy of not commenting on "rumors or speculation." T-Mobile did not respond to request for comment by press time.
The deal, which would likely face scrutiny from antitrust officials, would combine Sprint and T-Mobile, currently the third and fourth largest U.S. carriers, respectively, and create a joint customer base of roughly 53 million postpaid subscribes, according to the Journal.
Verizon, the largest carrier in the U.S., has about 95 million postpaid subscribers, while AT&T, the second largest, has around 72 million.
Sprint's bid for T-Mobile would fall just two years after AT&T called off its own $39 billion bid for T-Mobile, amid mounting opposition and federal regulatory challenges. The move came after Federal Communications Commission and U.S. Department of Justice took steps to block the merger on anti-competitive ground, saying the deal would result in higher prices and stifle innovation in the marketplace.
T-Mobile channel partners cheered the demise of the AT&T takeover, having feared the deal would complicate their relationships with T-Mobile or slow the carrier's recent channel gains.
Bill Trout, vice president of mobility at AB&T Telecom, a telecom and IT solution provider based in Gaithersburg, Md., said he would have similar concerns over a T-Mobile merger with Sprint.
"From a channel perspective, I have the same concerns as last go around. Under new leadership, T-Mobile has made very positive strides forward with their channel initiatives," Trout wrote in an email to CRN. "The carrier has rolled out more aggressive rate plans that have been very well received in the business community. A lot of new doors are starting to open with T-Mobile's new value proposition."
The carrier market has been bustling with M&A activity since that AT&T-T-Mobile deal fell through. In October 2012, SoftBank, Japan's third-largest mobile carrier, announced plans to acquire a 70 percent stake in Sprint for $20.1 billion.
Meanwhile, Deutsche Telekom, the majority owner of T-Mobile USA, penned a deal in October 2012 to merge the T-Mobile unit with rival U.S. carrier MetroPCS.
Zeus Kerravala, founder and principal analyst with ZK Research, said a Sprint-T-Mobile merger would make sense, given the synergies across the two companies and the recent push by each to grow its customer base. Sprint, for instance, in July unveiled the Sprint Unlimited Guarantee, which guarantees customers unlimited talk, text and data, while T-Mobile in March announced a new pricing strategy that prevents users from being locked into annual contracts.
"Both companies have been on the more aggressive side," Kerravala said. "They seem to align very well."
Kerravala added that the potential merger would also create a "much bigger and stronger competitor to AT&T and Verizon."
PUBLISHED DEC. 16, 2013