Sprint Corp. reportedly is planning a bid for T-Mobile US Inc., a move that would continue a period of rapid telecom consolidation and leave regulators questioning if the deal would encourage industry competition to improve network service and lower consumer costs.
Japan-based SoftBank Corp. completed its acquisition of Kansas-based Sprint in July, but Sprint could make a bid worth $20 billion in the first half of 2014 to merge with T-Mobile, The Wall Street Journal reports, citing "people familiar with the matter." T-Mobile is owned by Germany-based Deutsche Telekom, which may consider exiting the U.S. market by selling the telecom company, sources tell the Journal.
T-Mobile became publicly listed in May after merging with smaller U.S. telecom MetroPCS Communications Inc., and the company is now more valuable following the consolidation.
Both the Department of Justice and the Federal Communications Commission would review the merger. The DOJ would look at antitrust concerns while the FCC would be concerned with public interest concerns, including whether a merger would improve efficiency and consumer services enough to be worth a potential negative impact on market competition.
Pressure from those regulators led AT&T to abandon its proposed merger with T-Mobile in 2011, so it is unclear whether the Obama administration would favor the big four U.S. telecoms merging into the big three. Verizon Wireless and AT&T Inc. would remain the two largest telecoms in the U.S. even if Sprint made a successful bid for T-Mobile, so that could be a factor in a decision made by the regulators.
The DOJ allowed a merger between US Airways and AMR Corp. -- American Airlines' parent company -- in November with numerous conditions on the deal to mitigate antitrust damage to the market, including the requirements that US Airways maintain hubs in certain cities for several years and relinquish gate slots at major U.S. airports. This may have emboldened companies like Comcast Corp., which reportedly is considering whether regulators would allow it to merge with Time Warner Cable Inc.