U.S. Markets close in 3 hrs 19 mins

Why Sprint's Shares Rose 11.6% in July

Anders Bylund, The Motley Fool

What happened

Shares of Sprint (NYSE: S) gained 11.6% in July 2019, according to data from S&P Global Market Intelligence. The smallest of America's four major telecommunications networks moved one step closer to closing a long-awaited merger with slightly larger peer T-Mobile US (NASDAQ: TMUS).

So what

The U.S. Department of Justice gave this merger its stamp of approval, but only under certain conditions. The wireless market needs a fourth large-scale competitor, the DOJ argued, and DISH Network (NASDAQ: DISH) could provide that service if Sprint and T-Mobile offload some of their assets to the satellite TV specialist. At the end of the day, the Sprint brand should fall off the map and be replaced by a souped-up version of Boost Mobile -- under Dish Network's management.

Close-up shot of a handshake between two businessmen.

Image source: Getty Images.

Now what

The proposed package still requires some tweaking, and nothing is set in stone yet, but investors saw some light at the end of a tunnel that started way back in April of 2018. T-Mobile's stock also gained 7.5% last month, generally following Sprint's chart squiggles along the way. The two stocks have outperformed the S&P 500 benchmark over the last 52 weeks, but Sprint's investors will suffer a severe burn if this merger falls apart at the goal line.

Anders Bylund owns shares of T-Mobile US. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com