Sprint Corp (NYSE:S) is looking beyond a proposed T-Mobile US Inc (NASDAQ:TMUS) merger, as it continues to explore ways of unlocking maximum value from its most prized assets. The move to explore other ways of unlocking value comes on the heels of the parent company, Softbank, raising concerns that the trove of wireless services at stake remains undervalued.
Sprint-T-Mobile Merger Talk
According to people familiar with the matter, Softbank is considering spinning some of the spectrum into a separate publicly traded company as one of the ways of generating the desired value. However, if that does not happen, then any merger deal will have to take into consideration the value of those assets.
T-Mobile remains the likely deal partner given its size as well as its investment drive in the recent past that has seen it take Verizon Communications Inc. (NYSE:VZ) and AT&T Inc.(NYSE:T) head on. A gag order that required wireless companies to avoid any merger negotiations is set to expire on April 27 paving the way for a fierce bidding war for Sprint assets.
Sprint Resurgence
Talk of Sprint being acquired has seen its stock price soar by more than 100% over the past year as investors continue to look for ways of unlocking value. The stock’s impressive run also comes at the back of the company’s debt becoming manageable over the past one year. The fourth largest carrier in the US has also registered impressive subscriber growth.
A deal with another carrier looks likely given that Sprint is in dire need of cash to cover billions of dollars of debt, due soon. Debt maturities of more than $11 billion due in 2020 all but makes the case of why the carrier needs to push for a deal sooner than later. Softbank is also reportedly pushing for a deal given that; it does not want to bail out Sprint from its debt obligations.
“If the debt market starts to struggle as you are trying to refinance, the best case is your costs would skyrocket, the worst case is you cannot get funding. Either way, there’s tremendous pressure on Masa (Masayoshi Son) to get a deal done sooner rather than later,” said MoffettNathanson LLC analyst, Craig Moffett.
Sprint stock was unchanged in Friday trading session having edged lower by $0.10 to close the week at $8.50 a share.
