Where will Sprint’s search for a partner lead?

Industry analysts have been aflutter as they respond to and create speculation about who, if anyone, will acquire, be acquired by, or partner with Sprint, the number four US wireless carrier. Over the past few weeks, journalists reported various merger rumors involving Sprint, T-Mobile, Altice, Charter, and even a Sprint-Charter-Comcast combination.

Sprint has wanted a T-Mobile merger for years, but earlier discussions never panned out after the FCC and DOJ made clear they would oppose any combination of the  number 3 and  number 4 wireless companies. Now with T-Mobile’s success in the marketplace and higher valuation, it’s not clear T-Mobile wants the combination, at least for now. But Masayoshi Son, CEO of Sprint’s parent Softbank, keeps floating options, including one that would give T-Mobile control of the combined company.

As for Charter, Sprint probably couldn’t afford it. “[Sprint parent company] SoftBank already carries about $135 billion of debt,” the New York Times reported. “It would have to take on Charter’s more than $60 billion of borrowing, plus another big slug, perhaps $60 billion to $80 billion, to pay half the cost of Charter’s equity — $100 billion plus a premium — reckons the research firm MoffettNathanson. That would make SoftBank ‘the most indebted nonfinancial company the world has ever seen,’ MoffettNathanson said.” Charter has made clear that the company is not interest in a combination with Sprint.

Big telecom companies see President Trump and his pick to run the FCC, Chairman Pai, as an opportunity to consolidate the market. And with next-generation wireless on the horizon, many analysts see a business case for a wireless/cable combination. But how this will all shake out is anyone’s guess. In the meantime, Sprint’s dance for a merger partner continues.

Links:

Why Likely Suitors for Sprint May Hesitate (New York Times, Aug. 2, 2017)

T-Mobile and Sprint are in merger talks again (Speed Matters, May 19, 2017)

Charter declines merger offer from Sprint, Softbank (USA Today, July 31, 2017)