June 20, 2014
A major merger in the telecommunications world has moved one step closer to reality with Sprint finding eight banks to finance its proposed acquisition of T-Mobile, sources “familiar with the matter” told Reuters.
The debt package, which tops $40 billion, will include a bridge loan of approximately $20 billion to Sprint from Japan company Softbank Corp. The deal also includes $20 billion in refinancing for T-Mobile’s current debt load, Reuters reported.
Heavy hitters JPMorgan Chase & Co, Goldman Sachs Group, Deutsche Bank AG, Bank of America Merrill Lynch and Citigroup Inc are all in on the deal to enable Sprint, the No. 3 wireless carrier in the U.S. to scoop up its rival which currently sits in fourth place among the country’s top wireless providers. Japanese banks Mizuho Financial Group Inc, Bank of Tokyo-Mitsubishi UFJ Ltd and Sumitomo Mitsui Financial Group are also involved in the deal.
Sprint and T-Mobile are hoping to finalize financing details by the end of July and then announce a merger in August, the sources said.
Sprint’s plan to buy T-Mobile first took root last year, but the Justice Department and the FCC have been a thorn in the side of the carriers. The government is maintaining its long-standing position that the market is competitive with four major carriers and would prefer to see it continue that way.
The two companies have argued their merger should be allowed to give current market leaders Verizon and AT&T stiffer competition.
T-Mobile has remained steady as the country’s fourth-ranking carrier but has been making inroads in the past few years. One bid to attract more customers included plans to pay new subscribers’ ETF fees to a limit of $350.