Reports out of Japan say that Deutsche Telekom AG and Softbank have made a deal. Apparently, Softbank’s Masayoshi Son made a proposal in mid-May and Deutsche Telekom AG has agreed, although confirmation seems to be elusive. If true, the deal would bring together Sprint and T-Mobile in the USA to create a strong #3.
Of course, we’ve known that both sides have long wanted to make a deal for some time now — ever since Softbank completed its purchase of Sprint and Clearwire actually. The sticking point has never really been finding an agreement, but rather convincing US regulators that the number 3 really is better than the number 4. Given that we have no details about the deal, it’s hard to make any guesses just what tack the two carriers will take then they try to sell this to the FCC.
T-Mobile’s aggressive push as the ‘uncarrier’ under CEO John Legere has perhaps forced the issue and given the carrier a better possible sale price for Deutsche Telekom. But everyone knows it takes more than buzz to create earnings power, and DT has seemed happy with the idea of going out on a stronger note rather than slog through half a decade as the actual underdog on the way up. Softbank meanwhile is taking the longer view of getting scale and hopefully maintaining the momentum.
A Sprint/T-Mobile merger has been a staple of the M&A rumor circuit for half a decade now. The drawback always was the integration hassles that would come with integrating GSM with CDMA and all that. But with LTE now finally in the ascendant, the barriers have started to erode.
Would the combined companies take on the mantle of the ‘uncarrier’? And might the momentum of T-Mobile’s current juggernaut lose some steam waiting for a deal to close? I suppose we’ll have to wait and see. And since it’s nowhere near a done deal yet and won’t be for perhaps a year even if the rumors are correct, we’ll have to wait a long time.
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