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Will Sprint Corporation Take a Shot at Buying T-Mobile?

By Evan Niu, CFA and Erin Kennedy - Feb 10, 2014 at 6:00PM

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There's been much talk lately of an acquisition of T-Mobile by Sprint, but regulators have said such a move would come under very heavy scrutiny. Should Sprint even attempt this?

There has been a lot of buzz lately about the idea that Sprint (S) may be looking into acquiring smaller rival T-Mobile (TMUS 0.90%). Regulators, however, have been buzzing on the topic themselves, with a lot of very vocal opposition to the deal. While not naming this deal explicitly, the Justice Department stated last month that any proposed transaction that would consolidate the four big carriers into three would get "a very hard look."

In this video from Monday's edition of Tech Teardown, Motley Fool tech and telecom bureau chief Evan Niu and host Erin Kennedy discuss the possible acquisition, and whether Sprint should go forward with attempting the costly deal, despite the poor odds of its being permitted. Sprint argues that AT&T (T 0.05%) and Verizon (VZ -2.54%), the two biggest current players, are currently enjoying the lion's share of the operating profits in domestic wireless, and that the extra scale it would get from an acquisition of T-Mobile would effectively add a third large player, rather than remove a fourth. Evan is doubtful, however, that the regulators are going to see things that way.

Erin Kennedy and The Motley Fool have no position in any of the stocks mentioned. Evan Niu, CFA owns shares of Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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Stocks Mentioned

Sprint Corporation Stock Quote
Sprint Corporation
S
T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
TMUS
$146.86 (0.90%) $1.31
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$44.19 (-2.54%) $-1.15
AT&T Inc. Stock Quote
AT&T Inc.
T
$18.43 (0.05%) $0.01

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

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