Denver, CO, 06/10/2014 (Stocksntrade) – Sprint Corporation (NYSE:S) the privately held US-telecom player is marking time as the country’s highest telecom regulator continues to review its application for a merger with the country’s smallest telecom player – T-Mobile US, Inc (NYSE:TMUS). Many feel the FCC, along with the DOJ, is unnecessarily delaying the merger of the two telecoms because their merger will not give the new entity any monopoly over the industry, given the size and cross-sectional play by the likes of AT & T or Verizon.
But the delay is taking a higher toll on the stock prices of these two applicants.
Ever since the government regulatory bodies have delayed their approval the pressure has been building on both of the telecom companies.
Pressure On T-Mobile And Sprint
Separately, reports of both Sprint Corporation (NYSE:S) and T-Mobile US, Inc (NYSE:TMUS) losing ground on the stock markets continue to dishearten. Apparently, the downward rally is also following a nearly-done deal where value of T-mobile is priced at approximately $40 /share, as per Bloomberg reports.
At of previous trading session, T-mobile is almost 16% lower the price of $40 per share.
As per unconfirmed reports, the deal would cost Sprint $16 billion upwards in cash, with same amount in stock, and about $9 billion in net debt. However, for Sprint Corporation (NYSE:S) it already has a $26.6 billion net debt and has been leveraging a $1.3 billion credit facility.
Separately, other WSJ reports predict that if FCC/DOJ were to cut-down the merger, it will mean Sprint will have to pay T-Mobile a fee – to the tune of $1 billion as break-up fee, which will include cash as well as other collateral.
Earlier in 2011, when T-Mobile US, Inc (NYSE:TMUS) and AT& T merger was shot down, the latter had to bear the costs of break-up for the former. AT& T paid T-Mobile $4billion as breakup fees, as regulators saw the merger would give AT&T, the largest telecom player in the country, unprecedented monopoly in the industry.