Shares of Sprint (NYSE:S) jumped as much as 11% higher on Monday, thanks to a report saying that the Department of Justice is warming up to the consumer benefits of a merger between Sprint and T-Mobile US (NASDAQ:TMUS).
At 2:30 p.m. EDT, the stock had cooled down to a 9.8% gain. T-Mobile's shares are trading about 5% higher.
The New York Post cited a nameless insider with direct knowledge of the DOJ's review of the merger, which is reportedly starting to look like a done deal.
"If without the combination only AT&T (NYSE:T) and Verizon (NYSE:VZ) can offer 5G, they are concerned," said one source. Letting the second- and third- largest networks combine their financial resources, customer lists, spectrum licenses, and technology research under a single banner would create a third pillar of a scale similar to Verizon's and AT&T's, supporting a "true competitive marketplace."
The DOJ is still thinking about this $26 billion stock-swap deal, but it would be helpful to get some clarity in the regulatory process before the networks start to roll out their respective 5G solutions in 2019. An official staff recommendation could arrive as soon as October, according to the Post.
Mind you, T-Mobile already has a $3.5 billion contract in place with Nokia (NYSE:NOK) to start implementing its own 5G network plans. The argument that only a post-merger T-Sprint could provide a real 5G network seems spurious.
That being said, I'm not convinced that Sprint is long for this world without this quick buyout solution. Approve the deal now, or let the three remaining majors pick the meat off its carcass a couple of years down the road, under a bankruptcy structure.