T-Mobile/Sprint Talks Reportedly Back On

T-Mobile and Sprint are again in talks on combining in an all-stock deal, with their shares closing up 5.9 percent and 6.8 percent respectively Tuesday. CNBC reported no announcement is likely for weeks. The structure reportedly is complicated, but would put T-Mobile CEO John Legere in charge with Masayoshi Son, CEO of Sprint parent SoftBank, having a say in decisions. A T-Mobile/Sprint is seen as having a good chance of approval by the Trump DOJ and FCC (see 1612090053). In 2014, under pressure from then-FCC Chairman Tom Wheeler, Sprint dropped its pursuit of T-Mobile (see 1408070044). The companies didn’t comment. “This is a different kind of [DOJ] Antitrust Division,” analyst Jim Cramer said on CNBC Tuesday. “I think this goes through.” Weeks ago, "we put 50/50 odds on approval,” Craig Moffett, analyst at MoffettNathanson, emailed. “That seems like a reasonable starting point. There are good arguments for why it should be approved. But there are also good arguments for why it shouldn’t.” New Street analyst Kirk Boodry said on Bloomberg Tuesday a Sprint/T-Mobile is probably “much more likely” than a deal between Sprint and Charter. “What you get with T-Mobile is a lot of synergies,” he said. In a presentation last week at a Goldman Sachs financial conference, Sprint CEO Marcelo Claure said he was “heavily, heavily advised” by lawyers not to comment on potential deals. “We are always evaluating options,” Claure said. “We think, ‘Which is the one that's going to generate the highest shareholder return or create more shareholder value.’” Sprint operations and financials improved in the past three years, Claure said. “That has allowed us to have several different options.” Wells Fargo analyst Jennifer Fritzsche said if talks are underway again, it explains why the usually “outspoken” Claure was so reticent in his comments. “The equity market seemed to be to be pricing a scenario where Softbank would have to put in equity to close a deal,” she said in a note to investors. “We do not see this as a logical outcome.”