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.
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,
Chief Technology Expert, Technology Profits Daily