Additional funding required to finance increased valuation and T-Mo's debt
It's no secret that Sprint is pursuing a takeover of its fourth-place rival T-Mobile, and it seems as though financing talks are moving along at least in some capacity. According to a report from The Wall Street Journal, Sprint has been approached by at least two banks with terms on securing enough money to fund the buyout. T-Mobile is currently valued at about $26 billion with its current stock price, which has climbed since rumors of a Sprint buyout arose, and Sprint would likely have to pay a premium over that to pick up the whole company.
Another $20 billion would need to be raised by Sprint for a complete takeover, however, to cover T-Mobile's current debt situation. The combined sale price, according to those familiar, could reach $50 billion. To put that in perspective, AT&T's failed attempt to swipe up T-Mobile was set to come in at $39 billion.
As we must remind folks when talking about such a large takeover, the chances that the regulatory agencies approve such a deal are not likely to favor Sprint. Even if it were to secure the huge funding to buy T-Mobile, we have to think such consolidation in the wireless industry would be viewed as detrimental to consumer choice by the FCC and SEC alike. Softbank CEO Masayoshi Son isn't known for being bashful though, and we still wouldn't be surprised if they gave it a run anyway.