Both companies and their parents, Deutsche Telekom and Softbank, have been in frequent conversations about a stock-for-stock merger in which T-Mobile parent Deutsche Telekom would emerge as the majority owner.
People close to the situation stress that negotiators are still weeks away from finalizing a deal and believe the chances of reaching an agreement are not assured. The two sides have not yet set an exchange ratio for a deal, but are currently engaged in talks to hammer out a term sheet. T-Mobile and Sprint have had a seemingly endless dalliance over the years since Softbank took control of Sprint, pushed by the prospect of billions of dollars in cost synergies that a merger would bring.
The last time the two companies held meaningful talks earlier this year, Softbank's Masayoshi Son indicated a willingness to sell Sprint to T-Mobile. This time, given the all-stock nature contemplated, Softbank would emerge as a large minority holder in any combination. While T-Mobile CEO John Legere is expected to lead any combination that results from a merger, Son has made it clear he wants a say in how the company is run. That desire adds another layer of complexity to an already difficult transaction.
T-Mobile has not begun due diligence on Sprint, yet another step that could change current price expectations or the willingness to move forward. The biggest issue is whether any merger between the No. 3 and No. 4 wireless carriers in the nation would be approved by antitrust regulators. The risk of rejection by the Department of Justice will play an important role in the final decision made by both sides as to whether they will proceed with a deal.