Why A Sprint (S), T-Mobile US (TMUS) Merger Has Just Become More Possible: Alex Sherman

The vaunted Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) merger may not be too far from becoming a reality if the recent promotion from Sprint is to be considered, Alex Sherman said in a discussion on Bloomberg’s In The Loop.

According to Sherman, the rekindling of the Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) deal has something to do with the overall picture for Sprint becoming less optimistic in the long term. Sprint and T-Mobile aborted their merger plans last August.

“Quickly, I’ll give you the cynical point of view which is if you drive your margins to the ground, you make your company long-term look worse [and] regulators will be more okay with an eventual Sprint, T-Mobile merger,” Sherman said.

Sprint Corporation (NYSE:S) recently unveiled a new promotion which essentially throws money at customers who are willing to switch from AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ).

Under the scheme, AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) customers would need to show a copy of their bill, go to a Sprint Corporation (NYSE:S) store and surrender the phones they have under their existing plans.

However, Sprint is promising to halve what customers pay for their plans with competitors. The network is prepared to give unlimited minutes and texts, a comparable data plan plus a $350 Visa Prepaid card to cover early termination fees.

The Bloomberg panel noted that this new promotion may have been inspired by T-Mobile US Inc (NYSE:TMUS)’s aggressive promotions in line with its branding as the “uncarrier”.

As a result, T-Mobile US Inc (NYSE:TMUS) has been growing its customer base, the panel noted, which may have pushed Sprint to also rollout an aggressive acquisition strategy.

John Paulson’s Paulson & Co reported owning about 64.11 million Sprint Corporation (NYSE:S) shares by the end of the July-September quarter. Also by the end of that period, Paulson & Co reported owning about 15.02 million T-Mobile US Inc (NYSE:TMUS) shares. Another T-Mobile US shareholder is Larry Robbins’ Glenview Capital which has about 7.95 million shares of the company.