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KANSAS CITY, Mo. —Sprint is having “preliminary conversations” with the owners of T-Mobile about a possible merger, according to a report by Bloomberg News
The report cited people familiar with the talks but included no details about the discussions.
Earlier this week, Sprint chairman Masayoshi Son had said a merger with T-Mobile would be a “first priority” as the wireless company, based outside Kansas City, sought potential partners while the telecommunications industry is looking to strike deals. Son had emphasized that a T-Mobile merger is not Sprint’s only option.
Bloomberg’s report said the “informal contact” is between Sprint and its parent company, Tokyo-based SoftBank Group Corp., on one side and T-Mobile and its German-based principal owner Deutsche Telekom on the other. Son founded and heads SoftBank as its CEO.
The report said that neither side had hired investment bankers “formally” but that these dealmakers were “jockeying for roles.”
This means the talks are in the earliest stages, but it is equally clear where they are heading. It’s about more than which company buys which and the price tag attached.
Much of the value of the deal depends on building a bigger and stronger rival to Verizon and AT&T, which are industry leaders, said Ben Gomes-Casseres, professor of strategy at the Brandeis University International Business School in Waltham, Mass. His book “Remix Strategy” argues that business combinations have to obey three laws to be successful.
It means figuring out how to remix the two businesses’ assets into something more than the two companies represent separately.
“When you talk about a merger like this, it’s a little artificial who buys whom. They’re basically putting their assets together,” Gomes-Casseres said. “In the end, when you combine them, you have to manage them well enough so they create that value that’s promised.”
The outcome of that remix weighs heavily on both companies’ workforces, suppliers and communities on which they have significant economic impact.
Sprint and SoftBank had tried to acquire T-Mobile three years ago but dropped those plans as federal regulators made clear they were not interested in seeing the No. 3 and No. 4 carriers combine.