Sprint Prepared to Purchase T-Mobile For $32 Billion

Two of the largest telecom companies in the United States could become a threat to competition in the wireless industry

Sprint Mifi

Sprint's Masayoshi Son is CEO of Softbank, and is reportedly shelling out $40 per share to purchase T-Mobile. (Image credit: Jeff Golden)

Sprint’s purchase of T-Mobile is seemingly imminent, according to Reuters.

The third-largest telecom company is set to pay $40 per share for T-Mobile, the fourth-largest wireless provider in the United States. That’s equivalent to a 17% premium of T-Mobile’s closing share price on Wednesday.

German company Deutsch Telekom, owner of T-Mobile US, saw a boost in stock prices as well.

This isn’t the first time a company has tried to purchase T-Mobile, and it isn’t the first time T-Mobile has reaped benefits from potential suitors. The company received a huge $4 billion break-up fee from AT&T when the wireless company attempted to purchase T-Mobile for $39 billion three years ago.

The merger could threaten the competitive market, as whittling down the number of options for consumers also makes it easier for carriers to charge higher prices and create “premium” services for which customers will be coerced into paying.

The Federal Communications Commission is currently deciding rules for “net neutrality” that could allow carriers to charge for certain types of content or discriminate between content providers. It would make Netflix, for example, more expensive than Verizon’s video-on-demand services.

The next step for the two companies? Convincing government regulators that this merger is a good idea. But after the last failed merger, it could be harder than ever.

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