M&A Activity Flourishing in US Markets

While talks between the third and fourth largest wireless telecom operators are still in the preliminary stages, it has been reported that the continued growth of Verizon and AT&T is likely to be a motivating factor for going ahead with a merger, a move which has been a tentative proposition for some time now. The deal would strengthen the merged company’s subscriber listing, which currently stands at around 50 million subscribers each, allowing it to be more competitive in the wireless service market. Verizon and AT&T each have more than 100 million subscribers. Following a $130 billion deal with Vodafone last year, Verizon became the largest wireless operation in the United States, while also providing landlines, business services and cable television. AT&T has also diversified and recently agreed to a $49 billion acquisition of DirecTV.

Majority-owned by SoftBank in Japan, Sprint has been looking to increase its stake in the United States market, while at the same time majority owner of T-Mobile, Deutsche Telekom, has reportedly been looking to decrease its interests in T-Mobile. The proposed terms of the deal would see Sprint acquiring T-Mobile for around $40 per share in stock and cash, with Deutsche Telekom retaining just 20 percent of the merged company.

There is quite a lot of work to be done before the proposed Sprint/T-Mobile deal gets to the stage of seeking approval from antitrust and competition regulators, where it is very likely to meet up with some resistance, bearing in mind the stance adopted by regulators when AT&T proposed a merger with T-Mobile in 2011.