May 20, 2017 7:20 am JST

T-Mobile, Sprint openly flirt for marriage

Survival instinct brings No. 3 and 4 US carriers closer

SOICHI INAI and TAKASHI SUGIMOTO, Nikkei staff writers

NEW YORK/TOKYO -- T-Mobile U.S. and Sprint have been publicly talking up a potential merger since the revived proposal made the headlines this month.

T-Mobile Chief Financial Officer Braxton Carter expressed his interest in a speech in New York Thursday. The most logical partner is Sprint, he said. "There is a huge prize when you talk about Sprint, and that's true hard synergies. Consensus is 30billion plus."

Braxton might have been responding to calls from SoftBank Group President Masayoshi Son, who also is chairman of the Sprint unit, who said about 10 days ago that Sprint would be able to immediately reap synergies with T-Mobile.

Son had sought a similar arrangement in 2014, but T-Mobile did not appear so eager back then in the face of expected regulatory challenges.

Two developments since then may have changed T-Mobile's mind. One is the leadership change in the Federal Communications Commission, which oversees the U.S. telecom industry. President Donald Trump appointed Ajit Pai, who has been critical of Barack Obama's telecom policy, as chairman.

The second factor is the maturing telecom market itself. On April 20, market leader Verizon Communications said its subscribers declined for the first time ever on a quarterly basis, in January-March.

Yet some hurdles remain for a merger of the two companies. One is that the power dynamic has changed between T-Mobile and Sprint since three years ago. T-Mobile increased its subscribers by aggressively lowering rates and surpassed Sprint to become the No. 3 market player. Sprint, which has fallen to fourth place, may not be able to take the lead in the negotiations.

Heightening uncertainty over the U.S. political climate adds another wrinkle to the calculation. Trump's firing of FBI Director James Comey has created an outcry, even from within his own Republican Party. A weakened administration may find it harder to carry out its policies.

SoftBank Group Corp.

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