T-Mobile could join wireless deal talks that Sprint recently started with Comcast and Charter, consequently putting its merger negotiations with the Bellevue, Washington-based carrier on hold, some industry watchers believe. New Street Research's analyst Jonathan Chaplin wrote in a recent note to investors that T-Mobile may be interested in negotiation a "four-way deal" with the aforementioned parties, noting how such a scenario may be even better than a straightforward merger with Sprint, at least in the eyes of the third largest mobile service provider in the United States. According to Chaplin, T-Mobile needs to either resume its talks with Sprint as quickly as possible or find a way to join the negotiating table that currently consists of its Overland Park, Kansas-based rival, Comcast, and Charter. While the company has outperformed Sprint by a significant margin in recent years and thus has more leverage in any potential merger talks, that advantage may wane if Sprint manages to realize a wireless partnership with two of the three largest cable companies in the country that service more than 135 million people combined.
A deal involving all four parties would ideally benefit them more than any other alternative, Chaplin said, noting how such a scenario is still far from realistic due to the complex nature of the tie-up it involves. Both T-Mobile and Sprint have repeatedly signaled that they're open to all talks pertaining to mergers and acquisitions in the coming months and while many industry analysts were predicting that a consolidation of the two firms is the most likely outcome of their M&A-related ambitions, that may not be the case anymore. Sprint's decision to halt talks with T-Mobile for two full months while exploring an entirely different opportunity with the cable industry giants will certainly give the fourth largest wireless carrier in the U.S. more leverage in case it resumes negotiations with its rival but that may not be the main reason why Sprint opted for such a move in the first place.
A tie-up with cable companies would also likely be more immediately beneficial for Sprint given how the mobile service provider is currently trying to manage its increasing debt and is generally too leveraged as a company, a problem that a deeply integrated partnership with a complementary service may solve, allowing the firm access to a massive pool of potential customers. An update on the situation is expected to follow in the coming weeks.