Sprint's shares rise due to rumored merger with T-Mobile
The third-largest US wireless carrier, Sprint Corp, saw its shares jumped as high as 15% in the middle of speculation that the mobile company is nearing a deal to consolidate with rival T-Mobile US Inc, Bloomberg said in its report.
The shares of Sprint was trading at $10.82 per share as of 10:32AM in New York after it rose to as much as $11.47 earlier in the trading day, the report said. Since SoftBank Corp of Japan had acquired majority control of the Overland Park, Kansas-based carrier back in July, Sprint has seen its shares doubled since then.
Wells Fargo & Co analyst Jennifer Fritzsche said a deal between Sprint and T-Mobile, which are the third and the fourth-largest mobile-phone services in the US respectively, could create a stronger competition against bigger rivals Verizon Wireless and AT&T Inc. Fritzsche added that it will also help taper price-cutting tactics of T-Mobile, which will lead to a more robust industry.
In an interview with Betty Liu on Bloomberg Television's "In the Loop," Fritzsche stated, "Part of the plan all along has been for these two -- No. 3 and No. 4 -- to come together. I very much think, where there's smoke there's fire." The analyst also said the speculation suggested that the deal could be valid.
People familiar with the matter told the news agency that SoftBank Chief Executive Officer Masayoshi Son had already discussed with potential banks regarding a financing arrangement to help fund a T-Mobile deal. The people also said Softbank's plan was to acquire control of T-Mobile by purchasing the 67% stake currently owned by Deutsche Telekom AG in cash. Sprint would then be consolidated with T-Mobile. The people were not identified by the news agency.
When asked by Bloomberg for comment about the report, Sprint spokesman Scott Sloat did not immediately respond to the news agency's request.