Sprint and T-Mobile have resurrecting merger talks and are close to completing their plans, according to a report that was first published by German newspaper Handelsblatt. At the same time, T-Mobile announced that it is delaying its annual salary increases for employees.
Sources familiar with the matter from T-Mobile's parent company Deutsche Telekom reportedly told Handelsblatt that the two companies were working on an all-stock deal that would join T-Mobile, the third-largest U.S.-based wireless provider, and fourth-place holder Sprint.
In the midst of the reports, T-Mobile's CEO John Legere issued a memo to employees that outlines a delay in annual salary increases from July 2017 to February 2018 for employees through senior manager level. In its place, the provider is offering employees a one-time $1,000 "thank you" stock grant. Legere said in the memo that the grant will help "bridge the transition" for employees as the company shifts to a new schedule that will align performance reviews, compensation increases, and stock grants.
It remains unclear whether changes to the company's compensation schedule are related to the reported merger plans, and T-Mobile did not respond to CRN's request for clarification before publication.
The new merger reports suggest that Deutsche Telekom has warmed to the idea of a tie-up because it is asking to maintain control over the combined company. A report published by Reuters in February said that SoftBank Group, the majority owner of Overland Park, Kansas-based Sprint, was willing to hand over control of its U.S.-based carrier to Deutsche Telekom if it would clinch a merger agreement.
SoftBank's CEO Masayoshi Son at the time said it would "sincerely love to begin talks" with Deutsche Telekom.
Sprint and Bellevue, Wash.-based T-Mobile are no strangers to merger talks. The two companies attempted to join forces in 2014 but were rebuffed by the Federal Communications Commission (FCC) during the Obama administration under Chairman Tom Wheeler. However, the U.S. regulatory environment under the Trump administration is being seen as more merger-friendly. The FCC is currently led by Republican Ajit Pai, who has previously voiced his support of merger and acquisition activity in the telecommunications space.