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Sprint has banks lining up to fund its likely T-Mobile takeover

News by Andrew Kameka on Friday January 17, 2014.

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The oldest rumor in the US wireless industry may become a reality at some point this year, and if Sprint truly does make a blockbuster bid to acquire T-Mobile US, it won't have any problem getting the financing necessary for the costly acquisition. The Wall Street Journal reports that at least two banks have submitted proposals to fund a Sprint takeover of T-Mobile. The unnamed banks have reportedly pledged $50 billion to fund the purchase of T-Mobile, which is expected to cost about $31 billion for the purchase of the company and nearly $20 billion in additional costs related to T-Mobile's existing debt.

The Journal reports that Sprint majority owner SoftBank and T-Mobile parent company Deutsche Telekom AG agreed "in principle" months ago that a merger of the third and fourth place carriers would be the best way to compete with Verizon and AT&T. Deutsche Telekom and Orange used a similar strategy to create Everything Everywhere in the UK. A US merger would face more challenges because of government opposition to wireless networks merging and reducing competition. Executives are still anxious to reach a deal soon because of new spectrum auctions scheduled for next year. It could take 12 to 18 months for the government to approve a merger, and Sprint would likely have to pay billions to T-Mobile if the deal falls through. If this long-running Sprint-T-Mobile rumor is ever going to be proven true, now is as good a time as any.

source: Wall Street Journal

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Andrew Kameka
Andrew is based in Miami, Florida.

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