What happened

Speculation that Sprint (NYSE:S) would merge with T-Mobile (NASDAQ:TMUS) led to a run-up in the company's stock price though it actually went down once the deal was announced.

It was known throughout April that talks had begun between the two companies. This marks the third time the wireless carriers have come to the negotiating table.

The first discussions ended when it became clear that President Barack Obama's administration would not allow any deal that shrunk the number of wireless carriers from four to three. More-recent discussions ended over issues of control making it somewhat surprising that the two companies agreed "to merge in an all-stock transaction at a fixed exchange ratio of 0.10256 T-Mobile shares for each Sprint share or the equivalent of 9.75 Sprint shares for each T-Mobile US share," according to a press release.

Based on Sprint and T-Mobile's closing prices as of April 27, the deal would be valued at $59 billion for Sprint and approximately $146 billion for the combined company.

T-Mobile CEO John Legere smiling behind a microphone with a screen over his shoulder that says T Mobile earnings.

T-Mobile CEO John Legere will lead the combined company. Image source: T-Mobile.

So what

Sprint shares climbed throughout April due to speculation that a deal would be reached. Some of those gains were given back when the final all-stock deal did not contain a significant premium to where Sprint shares were trading.

Still, Sprint stock did climb in April. After closing March at $4.88, shares rose to $6.50 on April 27 before dropping to $5.61 on the last trading day of the month, a 15% rise, according to data provided by S&P Global Market Intelligence.

Now what

Sprint shares have fallen further in May, closing at $5.24 on May 7. That's partially because there remains considerable doubt about whether federal regulators will approve the merger. The merger is not going to be a quick process -- it could take more than a year -- and until then Sprint has to operate as normal while also preparing to combine with T-Mobile.

That's a challenging position that effectively puts shares in a holding pattern. Two questions remain: Will the deal be approved and what would Sprint do if it isn't? Those answers won't be coming quickly, so for shareholders the decision of whether to hold or sell really comes down to whether you believe the merger will be allowed.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.