Sprint is preparing to bid $20 billion to acquire its competitor T-Mobile, according to a Wall Street Journal report.
The news of the possible Telecoms bid broke out a few minutes after the ET markets have closed at 4 pm Friday.
Sources said the possibility of the bid pushing through would probably take some time. There would be antitrust concerns that have to be evaluated by regulators before the telecom company send a bid by the first or second quarter of 2014.
The Federal Communications Commission (FCC) would need to ensure the consumers' welfare in this potential bid and acquisition. Its goals focus on making sure that there are an appropriate number of Telecom companies competing in the market because of the limitations of the U.S. wireless spectrum which the carriers had to share. In a similar intention in 2011, AT&T proposed to acquire T-Mobile for $39 billion which was disapproved by the regulators because they believe the deal was not in the public interest.
An independent industry analyst Chetan Sharma from Seattle told USA Today that the FCC will decide in favor of the acquisition because the U.S Telecom market requires a "strong third player ... It makes sense for them to combine, and I've said before that it's a matter of time."
Aside from the better competition that will alight as the merger will allow the third carrier to close the gap between the stronger players, Verizon and AT&T, the acquisition will also allow the two companies to combine their systems and infrastructure to better provide reliable data service, offer more competitive packages to its consumers, and gain leverage in its supplier relationships.
There are indeed many advantages from the merger of Sprint and T-Mobile however there are some drawbacks and challenges too. Operational and technological integration of both companies would not be easy as consumers might be confused with the brand names.
