Deutsche Telekom is planning to merge T-Mobile with Sprint, according to a Tuesday report from German newspaper Handelsblatt citing sources with knowledge of the matter. Tim Höttges, Chief Executive Officer of the German telecommunications giant, is reportedly growing increasingly fond of the idea of consolidating T-Mobile and Sprint, provided that Deutsche Telekom maintains relative control of the hypothetical company, insiders said.
The Bonn, Germany-based mobile service provider is said to be looking for an all-stock deal and doesn't want any cash to change hands, likely in an effort to keep a tight grasp on "SprinT-Mobile" or however the merged entity would end up being called. T-Mobile's stock is currently valued at almost eight times more than that of Sprint, and while the former has a market cap of over $53 billion, the latter's valuation doesn't even reach $33 billion. This state of affairs indicates that Deutsche Telekom may have the upper hand in a potential stock swap, with its subsidiary being significantly more valuable than Sprint and having to offer fewer shares in the deal. While the situation is still more complicated than that seeing how T-Mobile also has much less outstanding shares than Sprint, it seems that the German telecom giant is now adamant to acquire Sprint instead of letting SoftBank purchase its own U.S. subsidiary. Industry sources claiming that Deutsche Telekom is now interested in taking over Sprint didn't provide a specific timeframe for when the company is supposedly looking to complete that acquisition. Likewise, it's currently unclear whether Sprint's parent SoftBank would be willing to agree to such a proposal after spending years trying to merge its subsidiary with the currently third largest carrier in the country, a title that T-Mobile took from Sprint two years ago.
Rumors of a potential merger of Sprint and T-Mobile have been circulating the industry for years now, with SoftBank being initially interested in acquiring T-Mobile when the Bellevue, Washington-based wireless carrier was still struggling to perform due to a number of reasons. While the situation of both mobile service providers is significantly different today, it seems that the two are still interested in a consolidation and will continue pursuing this possibility going forward, though it remains to be seen who ends up acquiring whom.