A Juicy 5G Long Shot In The Making

Two of America’s top wireless telecommunications companies are attempting to merge.

If the deal goes through, the nation’s third-largest carrier, T-Mobile (NASDAQ: TMUS), would join with the fourth biggest, Sprint (NYSE: S), in a $26 billion all-stock deal.

If the deal goes through, it will create a new $146 billion company that will vie for the No. 2 spot versus AT&T while shooting for the top spot occupied by Verizon.

Top Wireless

Source: Strategic Analytics

It’s a massive deal, and the reason?

The 5G gold rush.

Let The Race To 5G Begin

The potential new company would use its combined resources — along with a $40 billion investment to build out the nation’s fastest fifth-generation wireless network.

To be clear, this isn’t the first time the two wireless companies have tried to join forces. Four years ago a merger attempt was shot down by the Obama administration based on antitrust concerns.

But things might be different this time. We’re in a race to be the first country to deploy 5G wireless networks, and many reckon China to be slightly ahead.

As a result, the Trump administration is putting 5G deployment at a high priority. And this could be the perfect climate to finally get a T-Mobile/Sprint merger done.

But despite the 5G argument the question still lingers, will this deal go through?

Wall Street generally doesn’t think so.

Bloomberg reported the other week that most experts give the chance of the deal going through a 50/50 shot at best.

Former DOJ employees are also sour on the idea.

Speaking to Bloomberg the other week, former deputy assistant attorney general David Turetsky notes: “I find it hard, given the history, to see the DOJ not challenge it. It’s basically a four to three in the wireless industry. Even if they argue there are 10 players, they are still the top four.”

As such, the stocks for both companies have traded down recently.

Over the past month T-Mobile shares are down over 7%. Sprint shares have fallen 1% in the same time frame.

Technically Speaking… The Merger Makes Sense

There’s a lot at stake with this deal. Much more so than in previous years the two companies tried to push the merger through.

AT&T and Verizon plan to roll out next-generation 5G networks to customers over the next couple years.

T-Mobile and Sprint are much further behind in their 5G efforts. A merger could help them significantly bridge this gap.

From a technical standpoint the deal makes sense according PC Magazine. Sprint and T-Mobile’s proprietary technologies work well together and could offer great new 5G networks.

This and Trump’s continued policy of America first, China second could offer the needed boost to see things through.

A thought worth considering at least.

Both Sprint and T-Mobile shares are trading well off recent highs.

But any positive indications from the DOJ or Trump on this deal means we could have a juicy dip buy in the making.

For Technology Profits Daily,

Ray Blanco

Ray Blanco
Chief Technology Expert, Technology Profits Daily

You May Also Be Interested In:

What’s Powell Saying Now?

Stocks slid on Wednesday – ending a three day ‘winning streak’ – continued testimony by Fed Chair Jay Powell, rising concerns over rising rates of infection and excerpts from the now famous John Bolton book – ‘The Room Where it Happened’ all contributing to the risk-off mood that permeated the markets all day. And while stocks did open higher – they quickly failed going negative by 10 am… and then spent the rest of the day fighting – not sure whether to rise or fall as the algos tried to interpret the headlines.

Ray Blanco

Ray Blanco is the editor of Technology Profits Confidential as well as Breakthrough Technology Alert, FDA Profit Alert, and Technology Profits Daily. Ray has been with Seven Figure Publishing since 2010. In 2019, his closed positions in Technology Profits Confidential outperformed the S&P500 by 50%.

View More By Ray Blanco