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NEW YORK (TheStreet) -- Japan's telecom giant Softbank is reportedly working on a deal to buy America's fourth largest cellular provider T-Mobile (TMUS) - Get T-Mobile US, Inc. Report to combine it with recently acquired Sprint (S) - Get SentinelOne, Inc. Class A Report currently the third-largest U.S. mobile carrier. The newly created company would then be able to challenge number one Verizon Wireless (VZ) - Get Verizon Communications Inc. Report and number two AT&T (T) - Get AT&T Inc. Report.

According to a report by Japan's Nikkei news service Softbank is said to be in "final talks" with Deutsche Telekom to acquire a majority of T-Mobile stock through its new US business arm, Sprint. The price tag is believed to be in the $19 billion range. The newly merged company would have 100 million subscribers and Softbank would control a 60-70% stake.

Shares in Sprint were gaining more than 1.5% to $9.81 and T-Mobile stock was gaining nearly 2% to $32.19 in premarket trading..

Softbank completed its $21.6 billion purchase of what used to be known as Sprint/Nextel in July of this year. It now owns an 80% stake in the new Sprint Corporation.

Softbank is said to have wanted the deal to consist of a stock swap but Deutsche Telekom reportedly asked for a tender deal and other considerations to be added to the list. Purchasing T-Mobile will boost Softbank to become the second largest telecom company in the world (based on revenue) behind China Mobile (CHL) - Get China Mobile Ltd. Report.

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But, Softbank may have competition in a possible acquisition of T-Mobile. Dish Network (DISH) - Get DISH Network Corporation Class A Report is reportedly also interested in purchasing the fourth-largest U.S. carrier according to Reuters. Dish had been in the bidding race to acquire Sprint earlier this year.

Any deal would have to be approved by this country's Federal Communications Commission and the Justice Department. Earlier this year Softbank received FCC approval for the Sprint purchase. But reducing the number of major cellular carriers from four to three might be a different story.

AT&T tried to buy T-Mobile's U.S. operations in 2011 with a $39 Billion cash and stock offer but ran into legal and regulatory problems. Deutsche Telekom received $3 billion in cash and a swath of AT&T's cellular frequencies as part of the aborted deal.

Earlier this year T-Mobile completed its merger with the former MetroPCS at the time the country's fifth largest mobile carrier.

Written by Gary Krakow in New York.

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