Sprint edges closer to T-Mobile bid, despite big Q1 growth at both

This week Bloomberg reported that Sprint Corp plans to move ahead with its bid to acquire T-Mobile US, with a formal offer coming as soon as June or July – despite strong concerns expressed earlier this year by Department of Justice and FCC officials.

At the same time, Sprint and T-Mobile released their quarterly earnings reports, both of which undercut the idea that a merger of the two is essential for viability or profitability.

On May 1st, T-Mobile held its 2014 Q1 earnings call. It was all about competition, with CEO John Legere stating that the company will continue to grow its customer base without sacrificing profitability. Specifically, T-Mobile reported that it is the fastest growing wireless company in America, adding nearly 2.4 million new customers in Q1 alone, for a total of over six million in past 12 months.

Two days earlier, Sprint held its own quarterly earnings call. Not only did Sprint report its best operating cash flow in almost six years ($1.84B), but also that its new Framily plan added 1 million customers in 40 days, making it the fastest growing plan in Sprint’s history.

Nevertheless, Sprint is serious about its takeover bid. According to Bloomberg, “Sprint Chief Financial Officer Joe Euteneuer and Treasurer Greg Block met with six banks to ensure the lenders would be ready with financing structures when Sprint decides to pursue a takeover, said three of the people, asking not to named because the discussions are private.”

However, Sprint’s intentions may run into a somewhat tougher mood among regulators. Both DoD and FCC officials have indicated that they’ll be looking closely at Sprint and T-Mobile, as well as the widely heralded Comcast-Time Warner deal.

Speed Matters opposes Sprint’s bid, wanting instead increased competition and better opportunities for workers, consumers and U.S. innovation.

Sprint Said to Plan T-Mobile Bid as Banks Pushed to Fund (Bloomberg, May 1, 2014)

T-Mobile Adds 1.3 Million Customers as Sprint Pursues Deal (Business Week, May. 1, 2014)

Sprint Reports Results for the Quarter Ended March 31, 2014 (Sprint news release, Apr. 29, 2014)

Wireless Mergers Will Draw Scrutiny, Antitrust Chief Says (Dealbook, NY Times, Jan. 30, 2014)

FCC chief tells Sprint chair he is skeptical on T-Mobile deal (Reuters, Feb. 3, 2014)