T-Mobile US Inc. (TMUS), the fourth-largest U.S. wireless carrier, jumped the most in more than a year after the Wall Street Journal reported that rival Sprint Corp. (S) is considering a bid for the company.
The shares rose 8.6 percent to $27.64 yesterday in New York, marking the biggest one-day gain since October 2012. The stock has climbed 39 percent this year.
Sprint, the third-largest carrier, is studying antitrust concerns and could push ahead with a T-Mobile bid in the first half of next year, the Journal reported, citing unnamed people familiar with the matter. Such a deal would leave the U.S. with only three major mobile-phone services, potentially raising the hackles of regulators. AT&T Inc. abandoned a $39 billion bid for T-Mobile in 2011 after facing opposition from the U.S. Justice Department and the Federal Communications Commission.
“There is little chance for a Sprint/T-Mobile deal to get through regulators over the next two years,” said Walt Piecyk, an analyst at BTIG LLC in New York.
Sprint, based in Overland Park, Kansas, hasn’t decided whether it will make a bid, the Journal said. The deal could be worth more than $20 billion, depending on how much of a stake Sprint buys, the newspaper reported. T-Mobile had a market valuation of $22.1 billion at the end of yesterday’s trading.
Sprint and T-Mobile rank well behind market leaders Verizon Wireless and AT&T in wireless customers, and both have struggled to turn a profit. That’s prompted analysts and investors to suggest merging the two companies to create a stronger No. 3 in the industry.
A deal would extend a wave of consolidation in the telecommunications business. SoftBank Corp. (9984) acquired the majority of Sprint earlier this year, while T-Mobile absorbed MetroPCS Communications Inc. Deutsche Telekom AG owns 74 percent of T-Mobile, though it has discussed the idea of selling the stake.
Billionaire hedge-fund manager John Paulson, whose firm is the largest outside investor in T-Mobile, also has discussed the idea of Sprint acquiring the carrier. He sees Dish Network Corp., a satellite-TV company that lost out in its bid to buy Sprint earlier this year, as another potential suitor.
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