Dec 13 (Reuters) - Sprint Corp is mulling a takeover of smaller rival T-Mobile US and could make a bid in the first half of 2014, according to a report in The Wall Street Journal.
But the story on the Journal’s website, which cited unnamed people familiar with the matter, also said that Sprint had not yet made a decision and was mulling the regulatory implications.
Such a deal would be controversial and could be blocked by U.S. regulators. It is also possible that satellite TV provider Dish could compete with Sprint for the asset as Dish Chairman Charlie Ergen has previously cited a T-Mobile merger as a potential option for Dish, which is seeking to expand into wireless.
Sprint, which is 80 percent owned by Japan’s SoftBank , declined to comment and representatives of T-Mobile, which is majority owned by Deutsche Telekom, were not immediately available for comment. Dish declined to comment.
Sprint has been interested in combining with T-Mobile for years and while it is still interested, it is not currently in talks with the company, a person familiar with the matter said on Friday.
That person said that Sprint believes neither Sprint nor T-Mobile can compete effectively against the market leaders Verizon Wireless and AT&T Inc in the long term and that a combination could bring significant cost savings and revenue growth opportunities.
Top executives from both Sprint and T-Mobile US have publicly argued that more consolidation is needed in the U.S. wireless market and that the creation of a stronger rival to the top two operators would help promote competition.
T-Mobile US CFO Braxton Carter told Reuters in September that a Sprint/T-Mobile deal would be the “logical ultimate combination.”
But a tie-up between the No. 3 U.S. mobile provider Sprint and No. 4 ranked T-Mobile could run afoul of U.S. regulators.
When they blocked No. 2 U.S. operator AT&T’s proposed takeover of T-Mobile US in 2011, antitrust regulators said that the market needed four national competitors.
Shortly after the report on Friday, consumer advocate Free Press was already gearing up to do battle against such a deal. It urged the U.S. Federal Communications Commission and the Justice Department to carefully scrutinize this deal and how it effects “consumers and their wallets.”
“The public doesn’t need fewer competitors and fewer choices - not when the wireless market already has so little competition,” a statement from Free Press said, adding: “The public will get nothing good out of this deal.”
T-Mobile US was struggling to compete at the time of its attempted merger with AT&T.
But this year, the company has regained some ground with some unusual and competitive offers that appear to be winning over consumers and forcing bigger rivals to follow in its footsteps.
One telecom regulatory expert who asked not to be named was “dubious” that regulators would approve a Sprint/T-Mobile deal. Citing recent comments from the Justice Department and FCC, the person said that it looks like “it would be a extremely difficult deal” to get through.
T-Mobile shares closed up nearly 9 percent, or $2.20, at $27.64 on New York Stock Exchange just after the story was issued, but pulled back slightly in late trade. Sprint shares ended up 28 cents, or 3.43 percent, at $8.43 and rose to $8.70 in after-hours trade.