uploads///Telecom Q Postpaid Phone Net Additions

Is T-Mobile Open to Doing More Tuck-In Acquisitions?

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Mar. 29 2018, Updated 10:31 a.m. ET

T-Mobile–Sprint merger talks ended

T-Mobile (TMUS) and Sprint (S), the third- and fourth-largest wireless companies in the United States, decided to end their merger talks in November 2017 after years of discussion. They were not able to settle on mutually agreeable terms. The talks between T-Mobile and Softbank, of which Sprint is a subsidiary, about the ownership of the combined business also collapsed. SoftBank was reportedly not willing to give up Sprint’s critical properties, while T-Mobile’s parent company Deutsche Telekom wanted greater control over the combined business.

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During the Morgan Stanley Technology, Media, and Telecom Conference on February 28, 2018, Braxton Carter, T-Mobile’s chief financial officer, was asked if T-Mobile would be open to doing more tuck-in acquisitions going forward. He said T-Mobile would continue to evaluate M&A (mergers and acquisitions) opportunities going forward. Management stated that the Sprint merger offered hard synergies in excess of Sprint’s market capitalization, with control and price as roadblocks.

History of the T-Mobile and Sprint merger talks

The recent end to merger talks between T-Mobile and Sprint marked the second failed attempt by T-Mobile to merge with Sprint. In 2014, the two companies announced a merger deal to build their respective customer bases and compete with the two large wireless telecommunications companies, Verizon (VZ) and AT&T (T). However, the FCC (Federal Communications Commission) brought up regulatory concerns, which led the companies to call off the agreement.

After that, T-Mobile and Sprint took different roads. However, both wireless service providers have a common goal: to come closer to market leaders Verizon and AT&T. In 4Q17, T-Mobile gained 891,000 postpaid phone net subscribers, whereas Verizon added 431,000. AT&T added 329,000 postpaid phone subscribers, and Sprint added 184,000 during the same period.

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