Sprint has made good on its recent calls that it wanted to merge with T-Mobile to create a mobile carrier capable of battling against AT&T and Verizon in the U.S. market. According to reports, the two sides have finished negotiations and the deal is set at $32 billion, although a final public official announcement is not expected to happen for a number of weeks.
The Wall Street Journal reports Sprint is to pay $40 per share for T-Mobile. The report warned that investors and observers must take a cautious stance over the merger, as by combining the country's third- and fourth-largest carriers, it could hit road bumps and is not necessarily set in stone.
Neither Sprint nor T-Mobile have yet to comment on the rumors of the finalization of the deal merger that both sides had been publicly alluding to for a number of weeks. Deutsche Telekom AG owns 67 percent of T-Mobile US, while the Japanese telecommunications company SoftBank owns a majority share in Sprint.
Although the merger will see the number of wireless carriers in the country decrease, putting the third- and fourth-largest networks under one umbrella should enable the new company to compete against the big two where both had largely failed to do individually based on sheer size.
Still, despite the reported $32 billion price tag, some analysts believe the figure could be a low ball number, and many expect the final stock share price to rise before pen is put to paper.
Hannes Wittig, an analyst at JP Morgan in an interview with Reuters, said the $40 per share price seemed low.
"T-Mobile US should be worth more than that given that the synergies should exceed $20 billion, Deutsche Telekom would share some of the execution risk and Sprint would be getting control ... Somewhere in the high $40s would be more appropriate," he said.
Even if both sides have come to terms on a merger deal, it will still have to pass approval from the Federal Communications Commission and Department of Justice to come to full fruition. Both agencies have repeatedly stated they want to maintain more than two additional competitors to AT&T and Verizon in the country.
It is unclear whether the acquisition and merger will run into any governmental problems or if the agencies could put a red light on the deal before it can be manifested fully.
Both Sprint and T-Mobile have hinted the deal would drive down consumer prices and deliver faster speeds to users.