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T-Mobile Probably a Clear Winner No Matter the Sprint Decision

T-Mobile Probably a Clear Winner No Matter the Sprint Decision

(Bloomberg) -- Wall Street is chiming in on what’s likely to ensue in the aftermath of T-Mobile U.S. Inc.’s long-sought purchase of Sprint Corp., now that most analysts are saying that “the deal is more likely to break.”

Although an approved merger would allow T-Mobile to reap significant synergies, Nomura Instinet’s Jeffrey Kvaal says investors backing the nation’s third-largest wireless service provider are “winners in either scenario.” The equity research firm upgraded T-Mobile to a buy rating from neutral as “a broken deal could remove a sizeable multiple impediment” and restore a modest premium.

Shares of T-Mobile gained 0.6% early Tuesday, reversing a decline of as much as 0.6%.

The outcome of the offer to buy Sprint has clouded T-Mobile’s growth profile ever since it announced the deal in April 2018. Nomura’s Kvaal predicts a court decision is likely to be come down by early February, and pegs the odds of approval at 45%.

According to United First Partners, lawyers representing both companies performed “somewhat better” than state attorneys general’s legal team. Still, analyst Anna Pavlik says not much was seen during the trial last month that would “fundamentally change” the view that AGs will prevail. UFP still figures there’s only a 30% chance the companies beat regulators.

Cowen too believes T-Mobile “will experience greater upside” this year if the deal is blocked instead of going through. And while a failed merger would send T-Mobile in search of more spectrum, a denial “would prove a buying opportunity as we estimate the stock is currently worth $96 on a standalone basis,” Colby Synesael, a senior research analyst at Cowen, wrote Monday.

To contact the reporter on this story: Kamaron Leach in New York at kleach6@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper

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