It’s fairly old news by now that Sprint is rumored to be looking at buying T-Mobile. As we’ve already heard, it’s Softbank’s CEO that wants to push the deal through, but it’s one that many industry watchers and myself are struggling to make any sense of. The obvious questions like who’s name is going to be kept, or will it be a merger where both individual identities are kept intact, have been floated around plenty of times. But, a report today left me even more perplexed.
According to Bloomberg, Softbank’s CEO, Masayoshi Son has been approaching banks in order to raise the funds necessary to buy T-Mobile US. He’s looking to raise around $20 billion from banks, including Credit Suisse Group, Mizuho Bank, Goldman Sachs Group, Deutsche Bank and JPMorgan Chase & Co. Incidentally, these are the same banks which helped finance Softbank’s purchase of Sprint. Bloomberg’s source on this, obviously asked to remain anonymous, as any source of any rumors does.
Allegedly, Deutsche Telekom is willing to sell its stake in T-Mobile, although it has not yet held any talks with Sprint/Softbank. Son’s enquiries with the Banks are at a very early stage, and so we’re really at the very beginning of any process, and it could quite possibly end before it begins.
What really got me was a portion in Bloomberg‘s report centered on AT&T’s failed bid, and the subsequent penalty of $7 billion of cash and assets (a portion of which was a good chunk of spectrum). Son is concerned that his company could end up in a similar position, and it really can’t afford to be:
“If SoftBank and Sprint suffer the same fate, they couldn’t afford that kind of penalty, the people said. Son, who serves as Sprint’s chairman, has told banks he doesn’t want to pay a large breakup fee because the carrier is already carrying a lot of debt, said one of these people.”
In short, Sprint/Softbank is already carrying a lot of debt (owed to the banks mentioned previously), and can’t risk the deal going sour. So my question is: Why bid? It makes little sense to me that any company, particularly one struggling to be relevant in the U.S. market, already carrying debt, should try to take another company.
Sprint isn’t the only company rumored to be looking at T-Mobile. Dish has also been rumored to be after a piece of Tmo’s pie, and, that I can understand – to a point. At least with Dish Network being involved, T-Mobile could start to offer all-inclusive bundles of mobile and home communications along with satellite television.
The real question here: Is any of this ever going to come to fruition? I’m doubtful. But we’ll see in time, I’m sure.