U.S. Markets open in 9 hrs

What a Sprint/T-Mobile deal would mean for consumers' bills

Hot Stock Minute

It's becoming surival of the biggest in the telecom industry. 

Sprint (S) and T-Mobile (TMUS) are getting ready to combine forces after a wave of consolidation in the wireless space.

According to media reports, the two companies are close to finalizing the terms of the merger. Sprint is looking to buy T-Mobile for about $40 dollars a share, valuing the deal at about $32 billion.

The merger would combine the country's third and fourth largest wireless companies.

Consumer groups argue that less competition will translate to higher prices for consumers because it means fewer choices for them in the wireless market.

Advocacy group Free Press strongly opposes the deal. They said in a statement, “The public will get nothing good out of this deal.”

The U.S. Federal Communications Commission and Justice Department have also raised concerns about how a merger of this kind could raise prices. Regulators blocked AT&T’s takeover of T-Mobile in 2011 for similar reasons.

But despite those obstacles, Yahoo Finance Senior Columnist Michael Santoli said he thinks the merger has a good chance of being approved by regulators because you almost want a more formidable competitor in the wireless market. These smaller wireless carriers need to be able to compete with their bigger rivals, like AT&T and Verizon, he said. 

Japan’s Softbank, which owns an 80% stake in Sprint, has been trying to win over regulators by saying the deal will be beneficial to consumers.

Craig Moffett, analyst at media research firm MoffettNathanson gives credit to SoftBank for their perserverance, but he is skeptical that the deal will go through. Moffett thinks the deal has only a 10% chance of winning approval.   

A merger between Sprint and T-Mobile will add to the string of deals we've already seen in the telecom and media industries.

AT&T (T) said recently it would buy DirecTV (DTV) in a $49 billion deal. The acquisition would give AT&T control of the nation’s largest satellite TV provider.

And in the cable industry, Comcast (CMCSA) and Time Warner Cable (TWC)  want to hook up in a $45.2 billion marriage. The combined company would create the biggest cable TV provider.

It looks like regulators could have their work cut out for them.