DT reportedly warms to the idea of a TMUS merger with Sprint

German telecoms giant Deutsche Telekom is reported to be seriously considering moving for a merger between its US subsidiary and Sprint.

The report came from Handelsblatt, a newspaper that is not only German-language but protected by a fairly robust firewall, so we can’t offer too much detail beyond the headline factoid. The paper claims to have sources close to the DT board and other publications have reported that DT would be looking to be the dominant partner on the combined company.

TMUS and Sprint have long been the third and fourth players in the US, behind giants AT&T and Verizon. A combination of the two would still trail in third place by subscriber number, but would in theory be a much stronger competitor. Various scenarios have been mooted for the two companies in the past, including full acquisition by either.

Sprint is also owned by a much larger parent, in this case Japanese conglomerate Softbank, which has been so aggressive and entrepreneurial in its M&A activity recently. It’s possible that Softbank is now more interested in things like IoT, AI and robotics than the grubby business of scrapping for mobile subscribers, and would be happy to take a back seat in any future combination with TMUS.

The elephant in the room for any such move would be regulatory and antitrust activity. It would reduce the number of MNOs to three, something that would have European regulators spitting out their Bordeaux in indignation. Market response to the report was relatively muted, with Sprint shares up a couple of percent and TMUS flat. Neither company seems to have commented on the report.

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