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Is a Merger in the Air? – SoftBank Could be Willing to Surrender Control of Sprint and Take Minority Stake in T-Mobile

Is a Merger in the Air? – SoftBank Could be Willing to Surrender Control of Sprint and Take Minority Stake in T-Mobile

Reuters reports “people familiar with the matter” tell them Sprint’s parent company SoftBank could be prepared to sell the number four wireless carrier to T-Mobile’s parent Deutsche Telekom.

Is a Merger in the Air? - SoftBank Could be Willing to Surrender Control of Sprint and Take Minority Stake in T-Mobile

SoftBank has not yet approached Deutsche Telekom to discuss any deal because the U.S. Federal Communications Commission has imposed strict anti-collusion rules that ban discussions between rivals during an ongoing auction of airwaves.

After the auction ends in April, the two parties are expected to begin negotiations, the sources told Reuters this week.

The Roles Were Reversed Last Time

Two and a half years ago, SoftBank was prepared to acquire the then faltering T-Mobile in a deal estimated to be worth over $20 billion, but federal regulatory scrutiny of the proposed deal lead SoftBank to back away due to fears the deal wouldn’t be approved by regulators.

Due to T-Mobile’s recent success, Deutsche Telekom is no longer interested in letting go of the Magenta carrier, leaving SoftBank to try this new approach.

Any Deal Would be Subject to Close Regulatory Scrutiny

A merger between number three T-Mobile and number four Sprint is likely to face close regulatory scrutiny if a preliminary agreement is reached for a sale.

While SoftBank is still open to discussing other options, it is now willing to surrender control of Sprint and retain a minority stake in a merger with T-Mobile, the sources said. They asked not to be identified because the deliberations are confidential.

Serious negotiations for such a deal have not yet taken place, due to the strict anti-collusion rules that are in effect during the ongoing spectrum auction. The FCC-conducted auction ends on March 30, when negotiations between the two carriers are expected to begin in earnest.

SoftBank, Sprint, Deutsche Telekom and T-Mobile all declined to comment.

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