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T-Mobile and Sprint Merger Deal Nears Completion

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The long-awaited $26.5 billion proposed merger deal between T-Mobile (NYSE:TMUS) and Sprint (NYSE:S) is nearly complete. The CPUC (California Public Utilities Commission) has issued a proposal to conditionally approve the merger deal between T-Mobile and Sprint.

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T-Mobile and Sprint merger deal nears completion

According to a FierceWireless report, “The CPUC’s proposal—which is out for public comment—finds that the merger between Sprint and T-Mobile would create a new company that would be well-positioned to provide a robust 5G wireless communication service network that can compete with AT&T and Verizon.” The report also said, “The CPUC is proposing conditions that sound along the same lines as what some other states ascertained, such as providing 5G with speeds of at least 100 Mbps to 99% of the state’s rural population by the end of 2026 and providing 5G with speeds of at least 100 Mbps to 85% of the state’s rural population and speeds of at least 50 Mbps available to 94% of California’s rural population by the end of 2026.”

The new T-Mobile agreed to create jobs in California. Also, the combined company won’t increase wireless prices for retail customers for three years after the deal closes. The CPUC will likely vote on the proposal at its meeting on April 16. The T-Mobile and Sprint merger deal needs support from the CPUC. The merger deal also needs to go through a Tunney Act review of the Department of Justice’s settlement.

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Regulators approved the merger deal

Last year, the Department of Justice and the FCC approved the T-Mobile and Sprint merger on certain conditions. The combined company agreed to sell part of its wireless assets to Dish Network (NASDAQ:DISH). The pay-TV operator will acquire Sprint’s prepaid business and some spectrum licenses for $5 billion. Dish will launch its own 5G network. The company will likely replace Sprint as the fourth-largest carrier in the US.

The T-Mobile and Sprint merger faced a legal challenge by more than a dozen state attorneys general to stop the tie-up. The plaintiffs argued that the merger would reduce competition and harm wireless customers. The antitrust court trial for the case was held in December 2019. In February 2020, U.S. District Judge Victor Marrero rejected the plaintiffs’ arguments and ruled in favor of T-Mobile and Sprint. The multistate lawsuit was led by California Attorney General Xavier Becerra and New York Attorney General Letitia James. Becerra and James said that they won’t appeal the federal judge’s decision after reaching some state-specific promises.

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Stock returns

On Monday, T-Mobile stock fell 10.4% and closed at $76.53. At the closing price, the company’s market cap was $65.6 billion. The stock was trading 24.5% below its 52-week high of $101.35 and 12.3% above its 52-week low of $68.16. T-Mobile stock has fallen 2.4% YTD (year-to-date) as of Monday. In comparison, AT&T (NYSE:T) and Sprint have returned -18.6% and 48.4% YTD, respectively.

As of Monday, 82% or 18 out of 22 analysts recommend T-Mobile stock as a “buy,” while four recommend a “hold.” None of the analysts recommend a “sell” on the stock. The average 12-month target price of $99.21 indicates a 30% potential upside in T-Mobile stock.

On Monday, T-Mobile stock was trading 15.4% below its 20-day moving average of $90.42. Meanwhile, the stock is trading 10.9% below its 50-day moving average of $85.88 and 6.9% below its 100-day moving average of $82.23. T-Mobile’s 14-day relative strength index score of 40 shows that the stock is approaching the “oversold” zone.

T-Mobile’s upper, middle, and lower Bollinger Bands are $104.53, $90.42, and $76.32, respectively. The stock closed near the lower Bollinger Band on Monday, which indicates that it’s oversold.

On Monday, AT&T stock fell by 7.7% and closed at $31.81. Meanwhile, Sprint stock fell by 11.3% and closed at $7.73. The S&P 500 and the Dow Jones Industrial Average fell 11.98% and 12.93%, respectively. Read Stock Market Crash Could Be Trump’s Worst Nightmare to learn about the recent stock market crash.

In February, Sprint and T-Mobile revised their merger agreement terms. Read T-Mobile and Sprint Amend Merger Terms, Hurdles Remain and Another Setback for T-Mobile and Sprint Merger Deal to learn more. You can also read Will Data Breach Impact T-Mobile and Sprint Merger? for more analysis.

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