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Wireless Carrier Stocks Soar as Sprint & T-Mobile Restart Merger Talks

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Shares of Sprint (S - Free Report) soared more than 2% in Tuesday afternoon trading after reports emerged that the telecom company has restarted merger talks with T-Mobile (TMUS - Free Report) . The new rumors breathed some life into the rest of the wireless carrier industry, lifting shares of AT&T (T - Free Report) and Verizon (VZ - Free Report) as well.

According to anonymous sources cited by The Wall Street Journal, the latest round of negotiations between T-Mobile and Sprint—the third- and fourth-largest mobile providers, respectively—are still in preliminary stages.  

The companies previously ended merger negotiations in November, with T-Mobile parent Deutsche Telekom (DTEGY - Free Report) , Sprint majority owner SoftBank (SFTBY - Free Report) , and all other interested parties unable to reach an agreement on the terms of a deal.

But today’s development is just latest twist in what has been an ongoing story ever since Softbank completed its acquisition of Sprint in 2013. Softbank’s enigmatic CEO, Masayoshi Son, has been an outspoken proponent of the deal, but the two sides have thus far been met with regulatory headaches and differing expectations.

Sprint shares skyrocketed more than 20% to touch an intraday high of $6.41 shortly after the new reports emerged. T-Mobile followed suit, gaining as much as 7% through early afternoon trading hours. At the same time, AT&T popped about 2.6% and Verizon ticked roughly 4% higher.

A combined T-Mobile/Sprint would still fall behind both AT&T and Verizon in number of wireless subscribers and total market cap, but the new company would likely create billions in cost synergies almost immediately.

Meanwhile, consolidation in the broader telecom and media space has become the norm over the past few years, and with the rollout of 5G networks set to begin over the next few years, the wireless carrier industry is on the cusp of what should be a transformational period.

One thing investors will want to keep an eye on is chatter about the leadership structure of a combined T-Mobile/Sprint. In the past, it was assumed that T-Mobile CEO John Legere would be at the helm of the merged brand, but Son has also said that he wants a say in the direction of the company.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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