T-Mobile's Sprint Deal Gets Tailwind From Chinese M&A Talks
(Bloomberg) -- A potential megadeal between Chinese wireless carriers could give a boost to two companies half a world away: T-Mobile US Inc. and Sprint Corp.
China United Network Communications Group Co. is said to be exploring a merger with China Telecommunications Corp., a transaction that would unite the country’s second- and third-largest carriers.
The Chinese deal would be part of that country’s push to develop advanced 5G network technology, raising concerns that the U.S. could fall behind in that area -- a vulnerability that T-Mobile hopes to address with a Sprint acquisition.
T-Mobile has argued that its $26.5 billion Sprint takeover, which would combine the No. 3 and No. 4 players in the U.S., will help the companies roll out 5G services more quickly. The technology has been touted as a revolutionary next stage of wireless development, which could attract $200 billion in industry spending.
Critics of the T-Mobile transaction argue that it will make the mobile market less competitive -- and potentially lead to higher prices. But if China goes ahead with its own deal, that path could seem more attractive.
“The optics will give a political boost to the proposed T-Mobile/Sprint deal,” said Blair Levin, a Washington-based adviser at New Street Research.
China’s race to rollout 5G could create a Sputnik moment for the U.S. -- where the country justifies any number of decisions based on geopolitical concerns. That includes “allowing a merger in order to accelerate investment in technology,” said Levin, the former head of U.S. broadband strategy for the Federal Communications Commission during the Clinton administration.
U.S. regulators have been reviewing the proposed T-Mobile deal, a merger idea that received a scolding by previous antitrust enforcers.
T-Mobile and Sprint didn’t have an immediate comment on the Chinese speculation. But John Legere, T-Mobile’s chief executive officer, wasn’t shy about playing up the geopolitical angle when he first announced the Sprint deal in April.
“Global tech leadership for the next decade is at stake,” he said.
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