T-Mobile: Sprint's Next Billion-Dollar Buyout Target

Breaking down the pros and cons of the rumored Sprint takeover of T-Mobile.

May 5, 2014 at 11:15AM

We've seen merger mania as the main storyline for telecom giant Sprint (NYSE:S) during the last few years. Now, that same trend appears ready to envelop resurgent telecom antagonist T-Mobile (NASDAQ:TMUS).

Last summer, Sprint acquired the remaining assets of its tumultuous partner, and at times anchor, Clearwire. This deal then paved the way for Japanese telecom heavyweight Softbank to acquire some 80% of Sprint's shares outstanding, giving Sprint the balance sheet support it needed to compete against U.S. telecom top dogs AT&T and Verizon Communications.

T Mobile Logo

Source: T-Mobile

Sprint sets its sight on T-Mobile
In the latest chapter in Sprint's acquisition streak, news recently broke that Sprint is in the midst of laying the groundwork for a coming bid for T-Mobile. A linking up between Sprint and T-Mobile certainly makes sense on the surface. 

As the number three and four players in the U.S. telecom market, T-Mobile and Sprint combined could certainly enjoy the benefits and cost savings that would come with their combined scale. However, a Sprint and T-Mobile merger would also come with its fair share of risks, as history has taught us.

So, how should investors look at the unfolding Sprint and T-Mobile news?

In the video below, tech and telecom specialist Andrew Tonner discusses the Sprint and T-Mobile merger news, and why this deal appears to make sense for investors.

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Andrew Tonner has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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