Sprint rushing to a T-Mobile merger may have to do with a Democratic White House 2020

Sprint rushing to a T-Mobile merger may have to do with a Democratic White House 2020
The merger of T-Mobile and Sprint fell apart just a few short months ago, but rumors are swirling that they are at it again, this time determined to iron out the controlling stake differences, and really push for this thing to work. Why again and why now, you ask? Well, it turns out that debt-laden parent company of debt-laden Sprint sees only a limited window of opportunity to do it before the next, possibly Democratic White House kicks in when 2020 Presidential elections come.

A merger effort was once blocked by President Obama's White House on the premise of limiting competition, consumer choice, and the potential for raising prices, and if we get a Democratic President in two years, the result is likely to be the same. The current White House is much more likely to let a merger go through, provided that SoftBank's CEO, the owner of Sprint, isn't as adamant for control as during last year's talks.

SoftBank has 85% of Sprint, which in its turn has $32 billion in debt outstanding, and the announced doubling of capital expenditures during the race to build out a 5G network, won't be helping to reduce this burden any time soon. SoftBank, on the other hand, has $147 billion of debt, so it would really, really like to work on this pile, and already announced that it might float SoftBank shares and raise capital by making the Japanese carrier public. 

Merging Sprint with T-Mobile will untie SoftBank Group's CEO Masayoshi Son's hands financially, but he has only a short window to do it, before the next FCC spectrum auction hits in November, and all carriers are forbidden to talk deals and mergers before the results are disclosed. The whole process of approving an eventual merger announcement may take a year, at least, which would explain why Sprint is pushing for it to be done and dusted as soon as possible before the uncertainty of a potential deal-unfriendly administration looms on the horizon.

source: Reuters

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16 Comments

1. GreenMan

Posts: 2698; Member since: Nov 09, 2015

Capitalism at its finest! Don't get me wrong, I'm not a bloody communist, God no but... The core of communism, REAL communism i.e The Marxist Communism is the very existance of a giant polotical monopoly. And... Such a HUGE merger would imbalance the whole U.S cellular business sector and will 'transform' it into a nationwide monopoly which also happens to be the very basic definition of communism. I'm glad that Obama rejected that proposal. But of course, that won't stop the hungry wolves of wallstreet... Fingers crossed. G'Day!

2. Dr.Phil

Posts: 2452; Member since: Feb 14, 2011

Pretty sensationalist journalism going on here. I read the source article and it barely mentions the 2020 elections as reasoning behind them wanting to complete the deal. Wireless spectrum auctions in November and the increasing debt/poor finances of Sprint are what are the main reasons for pursuing the deal sooner than later.

3. tedkord

Posts: 17415; Member since: Jun 17, 2009

None of which matter if your merger can't get approved.

4. Dr.Phil

Posts: 2452; Member since: Feb 14, 2011

Yes, but in terms of timing, the prioritization of the deal rests on the wireless spectrum auction in November and the deteriorating finances of Sprint. Those are items that are going to affect the deal sooner than the 2020 elections. Not to mention that it’s speculative that a new administration would block the merger considering Obama also approved Time Warner being bought by Comcast and AT&T buying DirecTV. There was also a time under the Obama administration when AT&T was pursuing T-Mobile that the administration expressed a desire that Sprint and T-Mobile would instead merge. If Sprint was to continue to deteriorate further and lose subscribers, I don’t think any administration would block said deal.

12. turboC6

Posts: 89; Member since: Feb 19, 2018

Anyone who supported the Clinton Cartel is an enemy of Democracy. I waited 15 years for Sprint to merge with T-mobile. I gave up and dumped Sprint last month. Good Riddance. I like Legere, but his support of the Clintons and his Left wing politics really bothers me.

5. Dr.Phil

Posts: 2452; Member since: Feb 14, 2011

Also, let’s not forget that Sprint’s own CEO openly supported and fundraised money for Hillary Clinton in 2016. And Legere was pretty vocal about opposition to Trump too. They were both betting on a Clinton administration. If you think for a second that any candidate, Democratic or Republican, doesn’t remember who helped get them into the White House and won’t reciprocate that help then you are sadly mistaken. It’s very easy for lobbyists to get what they want. Politicians can always be bought.

8. tedkord

Posts: 17415; Member since: Jun 17, 2009

Regardless, they've got a better chance with a republican government than a democrat. Especially is Trump stands to make a profit.

6. piyath

Posts: 2445; Member since: Mar 23, 2012

Trump for life!! 2020 will be easy game..

9. tedkord

Posts: 17415; Member since: Jun 17, 2009

Yes! Life without chance of parole.

10. rebretz

Posts: 114; Member since: Dec 26, 2011

Only reason I'd like T-Mobile and Sprint to merge is all the wasted spectrum Sprint has around my area. I don't see anyway this merger will happen though with Softbank thinking Sprint is more valuable than it is.

16. matistight

Posts: 997; Member since: May 13, 2009

Monopoly? Have you heard of Verizon and ATT???

* Some comments have been hidden, because they don't meet the discussions rules.

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