New York – Sprint and T-Mobile are closer to announcing a merger agreement, according to a report in the Wall Street Journal.
Although the companies are still finalizing terms, the reported deal would have Sprint pay about $32 billion for T-Mobile. The acquisition could be announced early this summer.
The third- and fourth-largest carriers believe the merger is necessary for them to compete successfully against larger rivals Verizon and AT&T.
Sprint would pay about 50 percent cash and 50 percent stock, and T-Mobile’s majority shareholder, Germany’s Deutsche Telekom, would own a 15 to 20 percent stake in the merged company, the report said.
If the deal is blocked by the Federal Communications Commission or Justice Department, Sprint would pay T-Mobile more than $1 billion in cash and other assets, the Journal reported.
The two carriers believe they are more likely now to get approval because of recently revised FCC rules for auctioning off TV broadcast next year to wireless carriers, the Journal said. After a lobbying effort conducted mainly by AT&T, the FCC reduced the amount of spectrum that would be set aside solely for bidding by smaller carriers. Sprint and T-Mobile will argue that the decision will reduce competition and that their merger is needed to bolster competition against the two strong carriers.
Regulators have previously voiced opposition to a merger.
Both T-Mobile and Sprint are currently losing money, though T-Mobile is gaining subscribers while Sprint is losing them. Sprint is the third-largest carrier by subscribers, with T-Mobile fourth but gaining.