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Another report, published yesterday by WSJ states that Sprint and SoftBank executives are regrouping to re-think its potential move to acquire T-Mobile. While many of us aren’t at all shocked, SoftBank and Sprint’s executives have been “surprised by the level of opposition and its public nature”. Although they were certainly expecting some opposition, and always assumed it would need to put forward a strong case for the proposed acquisition, the opposition they have received is much stronger than they thought it would be.
One of the four major U.S. carrier attempting to buy-out and merge with one of the other four major network operators was always going to be a tough sell. The DoJ has maintained for a long time that it wants to see four healthy carriers competing. It believes that’s what’s best for the consumer and for the market. It repeated that stance recently in a meeting with the carrier execs, an opinion which the FCC shared. Now SoftBank and Sprint must decide how to move forward.
According to the report, they’re “letting the message sink in“. Masayoshi Son and Dan Hesse, the two companies’ chairmen may still decide to go ahead and attempt the buyout. Son believes that Sprint’s options are pretty limited if it can’t get bigger. Since SoftBank purchased Sprint it hasn’t been plain sailing, and the company is losing subscribers every quarter. If they do go ahead, they’ll spend a good number of weeks trying to perfect their argument and strategy moving forward. In their minds, it seems it’s this, or nothing.
Sprint and T-Mobile, 67% of which is owned by Deutsche Telekom AG, have argued that their companies should be allowed to merge to create more robust competition for market leaders Verizon Wireless and AT&T T -0.03% Inc. The Justice Department and the FCC repeatedly have indicated that the U.S. market is more competitive because there are four national carriers in the wake of their decision to block AT&T’s $39 billion deal for T-Mobile in 2011. But Sprint and T-Mobile had hoped authorities would view their tie-up differently.
As I’ve stated many times, this is far from over. I’m taking an educated guess that if the company decides to abandon its attempt to purchase Deutsche Telekom’s controlling stake, we’ll know pretty soon.