Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Happy Boxing Day! Investors are emerging from the holiday in good, albeit somewhat lethargic, spirits if this morning's tape is anything to go by. The S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES: ^DJI ) are up 0.22% and 0.33%, respectively, at 10:10 a.m. EST.
Is a big telecoms deal in the pipeline for the first half of 2014? It is, if Masayoshi Son, the aggressive deal maker at the head of technology conglomerate Softbank, has his way. Softbank, which only completed its merger (of unequals) with Sprint (NYSE: S ) in July, is now trying to line up financing to acquire a majority stake in T-Mobile US (NASDAQ: TMUS ) from parent Deutsche Telekom.
In truth, Sprint had already been eyeing T-Mobile for several years -- long before Son entered the picture. However, Son is explicit in his ambitions for Softbank, which he wants to turn into the world's largest mobile Internet company. Or as the colorful deal maker put it when he first announced the Sprint deal in November 2012, "I'm a man, and I think every man wants to be No. 1."
A play for T-Mobile would certainly help get him there in creating the No. 2 U.S. wireless carrier by revenue (third by total number of subscribers). However, despite Softbank's "junk" credit rating, the challenge in getting this deal done is not so much in selling it to lenders, but to antitrust authorities. Recall that when AT&T (NYSE: T ) made a play for T-Mobile in 2011, regulators proved unwilling to sanction a move from four national carriers to three.
That view doesn't appear to have changed, judging by FCC Chairman Tom Wheeler's recent public comment that "the mobile business is today, with four carriers, a competitive business, and it's important it stay that way."
In that regard, the market appears to be a bit too "deal happy" in pushing the shares of T-Mobile and Sprint up more than 20% since Dec. 12. If you wish to invest in one (or both) of these two companies on their own merits, that's one thing; however, betting that the two will combine looks a bit premature.
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