Texas residents are probably aware that the use of cellphones and other mobile devices has fueled explosive growth in the telecommunications industry. The current market leaders in the mobile sector are Verizon and AT&T, but their dominance may soon be under threat according to June 2014 reports in the financial news media. Reports are emerging that Sprint has entered into a $32 billion agreement to buy T-Mobile. The acquisition would be the 18th largest in telecommunications history, but there was no immediate confirmation of the reports from either company.
The reported price works out to about $40 per share. Half of this will be paid for in stock and the other half in cash. The deal is seen as a sign of intent on the part of Sprint's Japanese parent company SoftBank. Industry experts believe that the Japanese company feels that acquiring T-Mobile will give it the financial muscle to compete more effectively with Verizon and AT&T and make inroads into the wired broadband market. However, they point out that a deal of this size is likely to attract close scrutiny from the U.S. Department of Justice.
Regulators are faced with a delicate task when considering what decision today will best serve consumers in ten years. The traditional view of encouraging competition may not be appropriate in an industry that often requires significant investment in infrastructure. The telecommunications arena is evolving, and the public may be better served by large companies with the resources necessary to take on large projects.
Announcements of this type come after attorneys have spent months or years performing due diligence. Attorneys familiar with acquisitions and mergers will also be called upon to draft the purchase agreements and structure the funding mechanism. The hard work of experienced attorneys may allow the transfer of business ownership to progress smoothly and to the benefit of all parties involved.
Source: AllVoices, "Sprint to buy T-Mobile for $32 billion", Barry Eitel, June 05, 2014