Why Sprint Restarted Preliminary Talks on T-Mobile Merger

According to a report from Bloomberg on August 7, 2017, Sprint (S) has resumed talks about a potential merger with T-Mobile (TMUS), which are being held at the same time as discussions with cable companies. The two major US wireless carriers restarted discussions after Sprint’s exclusive negotiating period with Comcast (CMCSA) and Charter (CHTR) on a wireless deal that expired at the end of July.

Furthermore, during Sprint’s recent fiscal 1Q17 earnings conference call, Sprint’s management indicated that the company has had numerous discussions with multiple partners and that Sprint “has plenty of options.” Additionally, management stated that “The potential additional synergies that you have in doing a strategic transaction will always be significantly better than having a standalone entity.” Also, the management stressed that Sprint was never offered to Charter as a potential acquisition, after Charter recently announced that “they had no interest in buying Sprint.”

During the Obama administration, Sprint had tried to merge with T-Mobile. However, the regulating authorities indicated that they would not entertain such a consolidation. After the denial, both Sprint and T-Mobile took different roads in order to build respective customer bases. However, both the companies share a common goal of catching up with market leaders Verizon (VZ) and AT&T (T). Sprint and T-Mobile added 88,000 and 786,000 postpaid phone net customers, respectively, in 2Q17.