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Merger Of T-Mobile US Inc (NYSE: TMUS) and Sprint Corporation (NYSE: S) Will Not Happen By September         

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By on Company, Consumer Staples

The highly anticipated union of Sprint Corporation (NYSE: S) and T-Mobile US Inc (NYSE: TMUS) has been in the news for quite some time now. As of yesterday, there is very little evidence to support the notion that the merger will happen before November of this year 2014.

According to sources within each company, both companies are continuing the legal procedures and preparing a detailed file to present to United States regulators.

The owner of Sprint, Japanese SoftBank Corp (TYO: 9984), and the owner of T-Mobile, German Deutsche Telekom AG (OTCMKTS:DTEGY), have both agreed to the broader terms of a deal. Under these terms, Sprint would pay the price of about $40 per share for T-Mobile, placing a value of $32 billion on the company. These terms were disclosed in June.

The two parties have already agreed to other terms like break up fees, but are still taking extra time to finalize the proposed merger. Both T-Mobile and Sprint are making sure that their reasons for a merger are without flaw, since it will surely be subjected to analysis.

Representatives from Deutsche Telekom were unable to be reached for comment. Representatives for Sprint, T-Mobile, and SoftBank decided to abstain from making a statement.

According to analysts, the biggest hurdle in this merger are the regulatory challenges. Both the United States Federal Communications Commission (FCC) and the United States Department of Justice (DOJ) have expressed their interest in having at least two more mobile network operators to compete against market leaders AT&T (NYSE: T) and Verizon (NYSE: VZ).

Masayoshi Son, chairman of SoftBank, has argued against the regulators in the United States that the union of T-Mobile and Sprint would give both companies a leg up in the competition against Verizon and AT&T, the two dominating leaders in the industry. By combining Spring and T-Mobile, the joint company would have more than 100 million subscribers, which is still less than either AT&T or Verizon.

Son from SoftBank further argues that the merger of Time Warner Cable Inc (NASDAQ: TWC) and Comcast Corp (NASDAQ: CMCSA) as well as the merger of DirecTV (NASDAQ: DTV) and AT&T would increase competition against T-Mobile and Sprint even more, and marginalize the two companies.

However, the top enforces in the United States of antitrust and communications have already established that the wireless market is much too saturated. The Department of Justice in 2011 cut short a bid that AT&T made to purchase T-Mobile, who was struggling at the time.

 

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