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Why Sprint Stock Fell Last Week

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Sprint stock fell 8.5%

Last week, which ended June 9, 2017, Sprint (S) stock fell 8.5% to close at $8.12. There has been speculation that Sprint may merge with rival firm T-Mobile (TMUS) in an all-stock deal. An all-stock deal may not require financing in order for the merger to be completed.

According to a research report from The Business Journals, T-Mobile’s parent company, Deutsche Telekom, “would be able to benefit from the cost savings and scale of the combined entity without paying billions to finance a Sprint acquisition.”

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Sprint gained post-paid additions in 1Q17

As you can see in the above graph, Sprint (S) gained 42,000 postpaid subscribers in 1Q17 compared to T-Mobile, which gained almost 800,000 postpaid subscribers. Verizon (VZ) and AT&T (T), the two heavyweights in the US telecom space, lost approximately 280,000 subscribers and 375,000 subscribers, respectively, in 1Q17.

Sprint and T-Mobile’s previous merger attempts were thwarted during former President Obama’s administration as regulators suggested that such a consolidation would not be entertained. Shares of T-Mobile fell 2.5% last week.

The other bidders for Sprint’s business include cable companies such as Comcast (CMCSA) and Charter Communications (CHTR). These companies are reportedly looking to enter the telecommunications market.

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