Mergers & Acquisitions. Sprint-T-Mobile

Mergers & Acquisitions. Sprint-T-Mobile  Term Paper example
Masters
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Finance & Accounting
Pages 5 (1255 words)
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A short analysis of the potential merger form various perspectives have shown that it is far better for Sprint to operate individually than to merge with T-Mobile. But for T-Mobile, a merger with AT&T would make more sense than with Sprint. …

Introduction

The prospective merger between T-Mobile and Sprint has evoked mixed opinions among the shareholders of both the companies. T-Mobile USA is a subsidiary of German based Deutsche Telekom AG (DTE). The intention of DTE is to sell off the entity to Sprint and own a major stake in the combined entity. (Saitto et.al., 2011) The merger will be positive for both the companies in terms of the market presence. As of now both the companies are the third and the fourth largest operators. This deal would be beneficial for the shareholders of T-Mobile. The shareholders of T-Mobile are already worried with the recent drop in its share price due to drop in quarter-on-quarter profits. Therefore, any possible merger is an opportunity for the shareholders to sell the shares on a price better that a market price. Moreover, for those shareholders who are not selling off the shares, it is an opportunity for them to get more shares allotted in the new entity.
The situation is slightly different in terms of the shareholders of Sprint. Sprint has a strong technology back up to compete with all the competitors in the market. “Sprint Nextel has partnered with Clearwire to build a 4G wireless network using a technology called WiMax, which is now available in 43 markets.” (ABMN, 2010) Sprint is already committed to pay Clearwire Corporation for building 4G wireless technology. Sprint is bound to pay Clearwire a minimum amount of $850 million in two years. This can even go up based on the growth in data usage. ...
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