The two wireless carriers agreed that Deutsche Telekom, Bellevue-based T-Mobile’s parent, would have control in a combination of the two companies, said a person with direct knowledge of the matter. But any deal is still weeks away, the person added.
Sprint and T-Mobile US, in preliminary deal talks since at least August, agreed that Deutsche Telekom would have control in a combination of the two companies, said a person with direct knowledge of the matter.
The mobile operators are discussing a stock-for-stock merger, though are still weeks away from an agreement, according to the person, who asked not to be identified because the talks are private.
Shares of Sprint and Bellevue-based T-Mobile rose Tuesday. Both companies declined to comment.
Deutsche Telekom would put T-Mobile executives, led by Chief Executive Officer John Legere, in charge of the combined company, the person said. That’s important for the German carrier, which owns about 64 percent of T-Mobile and has come to rely on it as a key driver of sales and earnings growth, according to a second person familiar with the talks. It favors a deal with Sprint because potential savings could come relatively quickly, the person said.
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The idea of a combination between the No. 3 and No. 4 carriers was shot down by regulators in 2014, but with a new administration, preliminary discussions picked up earlier this year. Washington, D.C., regulators appointed by President Donald Trump haven’t signaled an insistence on maintaining a four-player nationwide wireless market that was a feature of the preceding administration.
“Such a deal would take at least a year to get approval and there is much logic on announcing a transaction before the November 2018 election cycle,” Jennifer Fritzsche, a Wells Fargo analyst, said in a note.
T-Mobile shares climbed 5.9 percent to $65.42 at Tuesday’s close, while Sprint surged 6.8 percent to $8.20. CNBC reported Tuesday details of the Sprint and T-Mobile talks.
Sprint has posted losses for a decade, even after SoftBank bought control in 2013 and returned the company to subscriber growth. As of June 30, the mobile operator had more than $12 billion in debt coming due in the next three fiscal years, putting pressure on SoftBank, led by billionaire Masayoshi Son, to find a partner.
Several issues stand in the way of a deal, according to people familiar…