Report: Sprint close to getting $45B in financing for T-Mobile deal

Sprint (NYSE:S) is close to securing $45 billion in debt financing from a group of banks to make a bid for T-Mobile US (NYSE:TMUS), according to a report from Dealreporter. However, a separate report from Bloomberg painted a more conservative view of the deal and said that top Sprint executives have not yet decided if they want to pursue a bid.

According to the Dealreporter report, as relayed by CNBC, Sprint will get financing from JPMorgan, Cititgroup and Bank of America-Merrill Lynch, and that the amount could be reduced by $5 billion, depending on how the deal is structured. The report, which cited an unnamed source, said Sprint would like to have a deal in place before its fourth-quarter the earnings release on Feb. 11, though it could also be done after that point.

Meanwhile, Bloomberg reported, also citing unnamed sources, that SoftBank CEO and Sprint Chairman Masayoshi Son and Sprint CEO Dan Hesse plan to decide in the next few weeks whether to move ahead on a deal. Son and Hesse have recently met with U.S. regulators, and have reportedly been told that a deal with No.4 carrier T-Mobile would face heavy skepticism.

Son will also meet with T-Mobile parent Deutsche Telekom to relay those conversations with regulators so the two companies can figure out if a deal can be structured. How Son and DT feel about the regulatory feedback will determine if they move forward, the report said, and while Son wants to push ahead, DT will not do so if the company thinks the parties can't win regulatory approval. The guidance Son got from regulators could also determine what types of concessions, including potential divestitures, SoftBank and DT might offer.

Sprint, SoftBank, T-Mobile, DT, the FCC and Department of Justice all declined to comment, according to Bloomberg.

Sprint has been trying to convince U.S. regulators that the prospect of consolidation should not be denied without a fair review, and that more consolidation is needed to better challenge Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T). However, that argument appears to have fallen on deaf ears so far. FCC Chairman Tom Wheeler reportedly expressed skepticism with the deal after meeting this week with Son and Hesse, and last week William Baer, assistant attorney general for the Justice Department's antitrust division, said further consolidation among the top wireless carriers would face intense scrutiny. Wheeler himself has also publicly said that he favors keeping four national wireless carriers.

"The argument that a third player in a market wants to merge with No. 4 to compete is old and tired," Chris Sprigman, a New York University law professor and former Justice Department attorney, told Bloomberg. "I'd be shocked if the professionals at the FCC and the DOJ are going to look at this the way Sprint wants them to."

Sprint argues that combining with T-Mobile would create a kind of "super-maverick" carrier to break up what it sees as a continuing duopoly in the market in the form of Verizon and AT&T. "SoftBank's argument about a super-maverick could make sense at some point in the future, but not now when T-Mobile is winning more market share than anyone else," Stifel Nicolaus analyst Chris King told Bloomberg. "Before this week I saw the likelihood they could complete the deal as about 25 percent, now I put it below 10 percent," he said, referring to Baer's comments.

For more:
- see this CNBC article
- see this Bloomberg article

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