Sprint is said to resume early talks on merger with T-Mobile

[NEW YORK] Sprint Corp has resumed preliminary talks about a potential merger with T-Mobile US Inc, people with knowledge of the matter said, as billionaire Masayoshi Son explores ways to build scale for a carrier facing increasing competition in the US wireless market.

The two wireless operators restarted discussions after Sprint's exclusive negotiating period with Comcast Corp and Charter Communications Inc expired at the end of July, according to the people, who asked not to be identified because the information is private.

The discussions show that Son, who leads Sprint's largest shareholder SoftBank Group Corp, is pursuing all options for industry consolidation as he continues to weigh a potential offer for Charter. SoftBank has been considering making a formal takeover bid for the cable company and combining it with Sprint, people familiar with the matter said earlier.

Shares of SoftBank rose 2 per cent to 8,988 yen at 1:51pm Monday in Tokyo, giving the company a market value of about US$89 billion.

Sprint has lost billions since SoftBank bought control in 2013, and the US wireless company's looming debt maturities put pressure on Son to find a partner. Sprint has argued publicly that a merger with T-Mobile makes sense because it would create a bigger wireless carrier to take on larger rivals AT&T Inc and Verizon Communications Inc. A surge in the value of Sprint's wireless spectrum holdings has persuaded executives to consider other deals, too, people familiar with the matter said in April.

Executives from both Sprint, which has a market value of about US$35 billion, and T-Mobile have lauded a potential merger of the two companies as offering substantial synergies. The idea of the combination was shot down by regulators in 2014, but with a new administration in Washington preliminary discussions picked up earlier this year. Sprint Chief Executive Officer Marcelo Claure said last week a decision on possible mergers is close at hand, potentially setting a new course for a company that has been slashing costs to stem mounting subscriber losses. Representatives for T-Mobile and Overland Park, Kansas-based Sprint declined to comment.

SoftBank has lined up as much as US$65 billion in financing as it separately considers a deal for Charter, which would bring Sprint together with the No 2 US cable company, people with knowledge of the matter said last week. A combination with Charter would allow Sprint, the fourth-largest US wireless carrier, to offer a full suite of services to customers from home broadband internet to phone plans.

Last week, Sprint reported a surprising loss last quarter of 39,000 customers, even as the company gave away a full year of unlimited data to new subscribers. The offer accounted for just 1 per cent of new customers, the CEO said. Analysts had forecast an increase of 127,452.

The shortfall comes after all three of Sprint's larger rivals added users in the latest period, underscoring the challenges in the business and the pressure on SoftBank to find financial salvation through a merger.

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