T-Mobile And Sprint Announce Merger, Regulatory Stumbling Block Cause Investor Concerns

On Sunday, T-Mobile and Sprint announced a merger that had some massive implications for the network carrier industry. The deal is supposed to be worth $26.5 billion and would basically make the combined result worth $146 billion. This would mean that both AT&T and Verizon would have a fierce competitor. However, investors are not convinced that regulators would allow the merger.

“Based on closing share prices on April 27, this represents a total implied enterprise value of approximately $59 billion for Sprint and approximately $146 billion for the combined company,” the press release reads. “The new company will have a strong closing balance sheet and a fully funded business plan with a strong foundation of secured investment grade debt at close.”

As the Wall Street Journal notes, if this merger actually goes through, it would mean that the U.S. would be dominated by three major carriers alongside AT&T and Verizon. This is also something that could present an issue for antitrust enforcers who might not allow something like this to happen. This is also what has investors worried about the prospects of either company.

Following the announcement by both companies about the merger, their stocks got took a hit on Monday, CNBC reports. Perhaps disappointed by the closing price or perhaps due to the disbelief that the merger could ever be allowed, it seems that some investors are just not buying what is being sold to them.

There is also the matter of the $43 billion synergies, which analysts are saying would likely be less than what the two carriers are promising. This is also the third time that both companies attempted to merge in the space of four years.

These concerns have caused analysts to downgrade the stocks of both T-Mobile and Sprint. Until the matter of the regulatory roadblock has been cleared, this is going to remain the case.