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TheStreet Open House

Sprint Preparing Financing for T-Mobile Bid: Report

Stocks in this article: S TMUS CMCSA TWC T

NEW YORK (TheStreet) -- Sprint (S) is in the process of raising financing for a takeover bid of competitor T-Mobile (TMUS - Get Report) as the company works to press a merger of the nation's third and fourth largest wireless carriers.

Bloomberg News reported after the market close on Wednesday Sprint has met with half a dozen banks about securing debt financing for the bid, which may be disclosed in June or July.

A merger attempt between Sprint and T-Mobile would be the riskiest attempt at wireless consolidation since AT&T (T - Get Report) failed to buy T-Mobile in 2011. That deal was blocked by the Department of Justice, which continues to believe that a competitive wireless industry would have four nationwide players.


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According to Bloomberg's report, Sprint and majority investor SoftBank believe they can make a better pitch to antitrust regulators about why a merger should be allowed.

Since taking a controlling 80% stake in Sprint in 2013, Masayoshi Son-run SoftBank has hinted at an eventual bid for T-Mobile. Earlier in 2014, Son made an over hour-long presentation in Washington to outline Sprint's wireless broadband investment plans.

Under SoftBank's ownership, Sprint appears poised to redouble its efforts in wireless coverage expansion, promotional data plans aimed at market share gains, and broadband investment. Meanwhile, both Sprint and T-Mobile are showing traction in winning subscribers from promotional wireless data plans, raising the prospect that prices are falling across the industry.

Such a scenario, while a threat to AT&T and Verizon's (VZ) profit margins, may aid Sprint's merger ambitions.

No debt financing commitments have been signed, and Bloomberg's report states it is unclear who would be tasked with leading a combined Sprint and T-Mobile. T-Mobile CEO John Legere is the leading candidate, Bloomberg said.

The report also indicated that Sprint would try to negotiate a small termination fee.

Comcast As a Blueprint

Sprint's efforts, were they to take shape and eventually be disclosed, come just as Comcast (CMCSA - Get Report) continues to press its efforts at a merger with Time Warner Cable (TWC - Get Report). Were Comcast to succeed in merging the nation's two largest cable and Internet providers, it might give fodder to Sprint's acquisition efforts.

Meanwhile, satellite giants Dish Network (DISH) and DirectTV (DTV) have been increasingly vocal about the prospect of a merger between the two video providers.

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