Sprint Stock Plummets As T-Mobile Merger Collapses

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By Dominik Bosnjak November 06, 2017, 10:35am
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Sprint stock started plummeting after trading opened on Monday morning in the immediate aftermath of its collapsed merger negotiations with T-Mobile. After concluding Friday trading with a valuation of $6.67 per share, the company opened at $5.86 earlier today and is presently more than ten percentage points down, with investors valuing it at $5.98. The Overland Park, Kansas-city based wireless carrier attempted to alleviate the market's negative reaction to its failed consolidation by announcing a major MVNO agreement with Altice USA before the market opened on Monday but it's currently unclear how successful was the company in doing so, with investors generally appearing to be unimpressed with its recent business decisions.

T-Mobile stock is also declining, having opened at $56.09 on Monday morning and currently being valued at $55.34, down more than six percentage points compared to last week. The Deutsche Telekom-controlled mobile service provider is still expected to weather through the aftermath of the collapsed consolidation more easily than Sprint, with some recent estimates describing its stock as being valued in a relatively realistic manner and not overly reliant on a major tie-up like Sprint's market cap appears to be. Over the weekend, both wireless carriers said that they're still willing to explore future mergers between themselves and other parties inside and outside the industry but explicitly stated that despite the potential to add significant value to their businesses, they weren't able to reach an agreement during their widely reported consolidation talks held in recent months.

The breaking point of the negotiations was the corporate structure of a potential combined entity as neither SoftBank nor Deutsche Telekom was willing to yield significant control over the merged company to the other party. The decision to call off talks was reportedly made by the Japanese conglomerate and accepted by its German counterpart in a matter of days last week. According to some estimates, Sprint and T-Mobile missed an opportunity to add up to $50 billion of value to their businesses, though it remains to be seen whether investors will punish this development in the medium term as the Monday drop in the valuations of both companies was to be expected and the two may still recover from it going forward.

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November 06, 2017, 10:35am
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