T-Mobile and Sprint merger may happen next week

T-Mobile US Inc. (TMUS) and Sprint Corp. (S) appear to be making progress in their talks for a merger and both companies are looking to complete negotiations and reach a final decision as early as next week. There is no certainty, however, that a deal will happen.

Deutsche Telekom, which owns over 63% of T-Mobile, and SoftBank Group Corp., which holds an 84.7% stake in Sprint, are deciding on the terms of voting control over the combined company. Deutsche Telecom and T-Mobile are also said to be discussing the debt package for financing the transaction. The talks are confidential and none of the four companies have provided any comment on the matter.

Sprint has a market value of $24 billion and T-Mobile has a market cap of $55 billion. In the event that a merger takes place, the resulting combined company would have more than 127 million customers and would prove to be a strong competitor for Verizon Communications Inc. (VZ) and AT&T Inc. (T), while also reshaping the entire wireless industry.

T-Mobile has gained market share, thanks to good network performance, customer service and its unlimited data plans. Sprint, on the other hand, has been seeing some weakness and joining with T-Mobile would benefit Sprint in terms of investments and competition. A merger would give both companies increased capability for the deployment of 5G technology, which is becoming essential.

The combined company would have more than 127 million customers

However, even though a merger would help build scale, it might not help in saving costs due to differences in networks for both companies.

Overall, the merger would prove beneficial for the companies if it manages to get approved. Considering the size of both firms, regulatory hurdles are likely to be high. AT&T is already fighting to bring its deal with Time Warner (TWX) to fruition so the path ahead for T-Mobile and Sprint may not be smooth.