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Monday, July 14, 2014

Report: Sprint and T-Mobile merger plans are being finalized

Report: Sprint and T-Mobile merger plans are being finalized
A report published out of Asia on Sunday, states
that both Sprint parent SoftBank, and T-Mobile parent Deutsche Telekom,
are working out the final details of the merger between the two U.S.
carriers. German telecom Dutsche Telekom currently owns 67% of T-Mobile,
and the plan is for SoftBank to purchase more than 50% of T-Mobile's
stock. SoftBank will use a combination of  stock swaps and cash to cover
the larger than $16 billion price tag on the transaction.

major banks will be financing the transaction, including large
institutions like J.P. Morgan Chase and Deutsche Bank. SoftBank will
originally finance the purchase by using brige loans, which will be
replaced using debt issued by Sprint and other longer term solutions.
Even though SoftBank already has 9 trillion yen ($88 billion USD) in
debt on which it pays interest, the banks have decided to go ahead to
fund the purchase.

Earlier this year, the deal was hung-up on the
break-up fees that both sides would pay. This is important because both
the FCC and the FTC have publicly been against the transaction, and
SoftBank is taking a huge risk that it won't be able to finish what it
starts. The same thing happened to AT&T when it tried to buy
T-Mobile in 2011. Having to pull out of the deal, AT&T gave T-Mobile $3 billion and a ton of spectrum.

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