T-Mobile Rises on Report SoftBank Open to Sprint Combination

  • Masayoshi Son was rebuffed by FCC on merger idea in 2014
  • New FCC Chairman Pai open to industry with 3 competitors

SoftBank Said to Consider Sprint, T-Mobile Combination

T-Mobile US Inc. rose as much as 5.3 percent following a report that SoftBank Group Corp. would be willing to give up control of Sprint Corp. if it would help cement a potential merger of the two mobile-phone carriers.

SoftBank can’t yet talk to T-Mobile’s parent company, Deutsche Telekom AG, because of a gag rule related to an auction of U.S. airwave licenses, but the companies are expected to begin negotiations when that process ends, Reuters reported Friday. Sprint, based in Overland Park, Kansas, jumped as much as 4.9 percent. Sprint and T-Mobile didn’t immediately return requests for comment.

Bloomberg reported in August that Masayoshi Son, who became one of Japan’s wealthiest men by turning Tokyo-based SoftBank into a telecommunications and technology powerhouse, still would like to merge Sprint with T-Mobile. The billionaire considered buying T-Mobile in 2014, before abandoning the effort when officials at the U.S. Federal Communications Commission and Justice Department signaled they were against a prospective merger.

On a conference call last week, Son told analysts SoftBank is open to all possibilities for a Sprint deal.

“We may buy, we may sell -- maybe a simple merger. We may be dealing with T-Mobile. We may be dealing with totally different people, different company,” he said. “We are open for any options. And we would like to discuss that going forward.”

T-Mobile is the larger of the two carriers, with $37.2 billion in sales last year, compared with $32.9 billion in revenue for Sprint over the past 12 months. T-Mobile has $29 billion in long-term borrowing, while Sprint has about $31 billion, according to data compiled by Bloomberg.

Investors have been betting the new Trump administration will usher in a less restrictive merger environment, reopening the door to a marriage between the carriers. T-Mobile shares are up 72 percent over the past year, and Sprint has more than tripled.

Son may not find the door slammed in his face for trying a Sprint-T-Mobile tie-up under a Republican administration the way he did in 2014, when Democratic regulators met with Son and dissuaded him from attempting to buy T-Mobile because it would reduce the number of nationwide mobile providers to three. Those regulators said they were intent on preserving four national wireless carriers to ensure competition.

In an interview Feb. 10, Federal Communications Commission Chairman Ajit Pai, a Republican elevated by President Donald Trump rejected the idea that four competitors are necessary.

“I certainly don’t see it as my role, I don’t see it as the FCC’s role, to proclaim from Olympus how many competitors will be allowed to compete in a marketplace,” Pai said. “I would much rather ensure that the regulatory framework promotes competition, and make sure that we take action to prevent anti-competitive conduct.”

Asked what he would tell SoftBank’s Son, Pai replied, “What I would tell him in private is exactly what I told the American public at my confirmation hearing, is that the test that I will apply to every transaction that comes before me is whether the consummation of that transaction would be in the public interest.”

Son secured a meeting with President Donald Trump in December and held out prospect of 50,000 new U.S. jobs through a $50 billion investment in new companies.

Pai’s predecessor, Democratic Chairman Tom Wheeler, joined Justice Department officials in 2014 in dissuading Son. In 2011 Democratic regulators intent on preserving four nationwide carriers forced AT&T Inc. to abandon its pursuit of T-Mobile.

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