After multiple unsuccessful attempts, U.S. cellular carriers Sprint and T-Mobile are reportedly on the verge of a merger deal that would redraw the wireless landscape and pose a serious threat to Verizon and AT&T's long-standing duopoly.
Citing sources familiar with the matter, Reuters reports negotiations between Sprint and T-Mobile have progressed to an advanced stage, and the companies are expecting talks to culminate in a deal as early as next week.
According to the report, the parent companies of each wireless operator are currently considering how best to divvy up voting control over the combined entity, as well as finalizing debt financing packages to fund the deal. Japanese tech giant SoftBank owns a majority share of Sprint, while T-Mobile is controlled by German telecommunications titan Deutsche Telekom.
Depending on the agreement, Deutsche Telekom could consolidate the company on its books without owning a majority stake, sources said.
T-Mobile and Sprint, the nation's third- and fourth-largest wireless providers, respectively, own a combined 127 million customers. Merging the pair would create an entity challenging No. 2 carrier AT&T, which reported net gains to end the most recent quarter with about 144 million subscribers. AT&T sits just behind Verizon's more than 150 million wireless customers.
This is not unfamiliar territory for SoftBank and Deutsche Telekom. Executives have been working toward a tie-up for years, starting with SoftBank's initial attempt to purchase T-Mobile in 2014. That bid was quashed by pressure from government regulators. Subsequent efforts also failed.
Prior to the current round of talks, Sprint and T-Mobile met at the table last year, but negotiations ended abruptly in November when SoftBank CEO Masayoshi Son backed out just short of the finish line.
In addition to reaching a workable deal, a Sprint-T-Mobile merger faces scrutiny from U.S. antitrust watchdogs. The Justice Department has not taken kindly to industry shakeups, as evidenced by its attempts to block AT&T's $85 billion takeover of Time Warner.