Why Trump Might Hang Up on a Sprint/T-Mobile Merger After All

Donald Trump's election has proved a boon for shareholders of Sprint (S) , on the premise that a Republican administration would be open to a merger of the carrier to T-Mobile USA (TMUS) . Regulators under Obama had pushed back against Sprint Chairman Masayoshi Son's goal of combining the U.S.'s third- and fourth-largest carriers.

While Sprint dropped nearly 1.9% to $7.35 on Friday, the stock is still up 17% since election day. Buzz about a possible merger with T-Mobile has given investors renewed confidence in the stock.

The incoming administration might not be predisposed to a wireless deal, however, BTIG LLC analyst Walt Piecyk suggested in a report. Citing the populist themes of the campaign, Piecyk assigns just a 20% probability of a deal passing under a Trump administration.

"Job loss and rising prices are clearly populist issues and a Sprint/T-Mobile merger could threaten both," Piecyk wrote.

Trump advisor Stephen Bannon, a former Goldman Sachs (GS) banker, could fear that a merger and the arguments used to support it would not play well among grass roots supporters. "Analysts may use the standard labels of cost synergies and a "more rational pricing environment" but Bannon, an ex-banker, knows what those terms mean to his base," the analyst added.

Trump has shifted on some positions, acknowledging that the wall on the border of Mexico will be more of a fence in some places and stating that he might keep some elements of Obamacare, despite vowing to repeal the program before the election. Likewise, the populist tone could change.

In addition, T-Mobile USA's parent company, Deutsche Telekom AG, may not be up for a deal. Deutsche Telekom CEO Tim Hoettges told a Barcelona investor conference this week that the telecom is "not in the mood" to sell its majority position in T-Mobile USA or taking on a partner in the U.S. wireless market.

Likewise, Masayoshi Son hailed Sprint's turnaround at a November earnings call for Tokyo telecom and tech group Softbank, which holds a majority stake in the U.S. wireless carrier. While he has championed a deal with T-Mobile before, he presumably is happy with Sprint's progress.

A German-Japanese telecom could present its own issues to a Trump administration, Piecyk noted, by creating a foreign carrier "on which 100 million Americans send emails, texts and access the internet."

The final breaking point for the Twitter president could come from social media, the analyst observed. T-Mobile USA CEO John Legere had a Twitter war with Trump in 2015, in which the telecom exec promised to leave the planet if the Republican nominee were elected.

Sprint and T-Mobile USA declined to comment about the BTIG report.

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