Sprint Falls on Report That SoftBank’s Mulling T-Mobile Deal

Sprint Nextel Corp., which agreed to a takeover by Tokyo-based SoftBank Corp. in October, fell the most in three weeks after Reuters reported that the Japanese company is discussing an alternative deal with T-Mobile US Inc.

Sprint shares dropped 1.4 percent, the biggest one-day decline since May 13, in New York trading yesterday. The stock has climbed 28 percent this year, boosted by a takeover contest between SoftBank and Dish Network Corp.

Since Dish made a $25.5 billion counteroffer for Sprint in April, SoftBank has intensified talks with T-Mobile parent Deutsche Telekom AG about a “plan B” deal, Reuters said, citing unnamed people familiar with the discussions. In one scenario, SoftBank could purchase Deutsche Telekom’s 74 percent stake in T-Mobile, the fourth-largest U.S. wireless carrier, Reuters reported.

SoftBank, which made a $20.1 billion offer for Sprint, had been in earlier talks with Deutsche Telekom last year, according to the report. The Japanese company is looking to buy a U.S. carrier to aid its international expansion. Dish, meanwhile, wants to use Sprint to bundle wireless offerings with its existing satellite-TV service.

Mitsuhiro Kurano, a Tokyo-based spokesman for Softbank, declined to comment on the report. A representative for Bellevue, Washington-based T-Mobile declined to comment. Overland Park, Kansas-based Sprint, the third-largest U.S. mobile-phone provider, didn’t have an immediate comment.

Dish’s Approach

Before Dish Chairman Charlie Ergen made his play for Sprint, he informally approached Deutsche Telekom about a possible merger with T-Mobile, people close to the situation said in April. Dish made the proposal sometime before April 10, when Deutsche Telekom announced a sweetened bid for MetroPCS Communications Inc., according to the people. T-Mobile and MetroPCS completed their merger on May 1.

Earlier today, Sprint said retired Admiral Mike Mullen will join the board as an independent director following the proposed deal with SoftBank. Mullen will oversee Sprint’s compliance with an agreement the company made with U.S. government agencies to win approval for the transaction.

When Deutsche Telekom agreed to merge T-Mobile with MetroPCS, the German company pledged not to sell shares of T-Mobile on the stock market for 18 months. The exception is if it sells the stake all at once to a third party, Deutsche Telekom Chief Executive Officer Timotheus Hoettges said at a shareholder meeting in May.

“We are in a position to sell all shares in one go,” Hoettges said.

Before it's here, it's on the Bloomberg Terminal.