Please ensure Javascript is enabled for purposes of website accessibility

Sprint Stock Jumps on Merger Talks

By Timothy Green – Apr 10, 2018 at 3:50PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The wireless carrier is reportedly talking about a deal with T-Mobile.

What happened

Shares of Sprint (S) soared on Tuesday after The Wall Street Journal reported that the wireless provider had restarted merger talks with rival T-Mobile US (TMUS 2.14%). Previous talks collapsed in November, putting a deal between the two companies on ice. Sprint stock was up about 18% at 3:10 p.m. EDT, while T-Mobile stock was up about 7%.

So what

Talks between Sprint and T-Mobile are at a preliminary stage, according to the WSJ's sources, and it's unclear exactly what's being considered. A disagreement over who would control the combined company torpedoed merger talks last year, and regulatory issues killed a deal in 2014.

A notepad with M&A written above a drawing of a big fish eating a little fish.

Image source: Getty Images.

One major issue: Around 85% of Sprint is owned by SoftBank Group, while T-Mobile is controlled by Deutsche Telekom AG. Talks last year fell apart after SoftBank CEO and Sprint Chairman Masayoshi Son took issue with giving up control of the wireless carrier. Nothing has changed in the past five months, so that hurdle remains.

Another possible problem: AT&T's proposed takeover of Time Warner is in limbo after the Department of Justice sued to block the deal late last year. Whether the Trump administration will allow a Sprint and T-Mobile merger is unclear.

Now what

If Sprint and T-Mobile do go through with a merger, the resulting company will become the second largest wireless carrier in the U.S. with around 100 million customers. That's a bit ahead of AT&T and slightly behind market leader Verizon Communications.

But such a deal would reduce competition, giving consumers only three options. If Sprint and T-Mobile attempt to merge, regulatory scrutiny is a guarantee.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends Time Warner and T-Mobile US. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sprint Corporation Stock Quote
Sprint Corporation
S
T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
TMUS
$135.52 (2.14%) $2.84

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.