Report: Sprint looking at buying T-Mobile

The third-largest US mobile carrier might bid for its smaller rival next year, The Wall Street Journal says

Sprint is considering an acquisition of T-Mobile US that would reduce the U.S. mobile industry to three large carriers if approved by regulators.

The country's third-largest mobile operator, which itself was acquired by Japan's SoftBank only months ago, is studying regulatory concerns and might make a bid in the first half of next year, according to a Wall Street Journal report on Friday that cited unnamed sources.

A merger of Sprint and T-Mobile would eliminate one major national competitor from the market, so it could draw fire from antitrust regulators. In 2011, the U.S. Department of Justice and the Federal Communications Commission shot down a proposed merger of T-Mobile and AT&T. If regulators react badly to Sprint's hints at buying T-Mobile, the bid may never happen, the Journal said.

Consumer activist groups wasted no time attacking the reported merger plan.

"The public doesn't need fewer competitors and fewer choices -- not when the wireless market already has so little competition," Free Press President and CEO Craig Aaron wrote in a statement. "As they did in blocking the merger between AT&T and T-Mobile, the FCC and Justice Department must carefully and closely scrutinize this deal and its impacts on consumers and their wallets. The public will get nothing good out of this deal."

"A stronger third-place competitor, better able to keep AT&T and Verizon in check, might sound appealing. But it's not worth the price of losing the number four competitor," said John Bergmayer, a senior staff attorney at Public Knowledge, in a blog post Friday.

A carrier with Sprint's and T-Mobile's combined weight could be a bigger rival to AT&T and Verizon Wireless, with more than 50 million postpaid subscribers, but it would still be dwarfed by the two largest carriers.

T-Mobile's market capitalization was about US$20 billion before its stock soared by nearly 9 percent following the Journal's report on Friday. The company is majority owned by Deutsche Telekom but went public earlier this year after completing its own buyout of MetroPCS, a smaller carrier. In 2011, AT&T offered about $39 billion for T-Mobile.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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Tags business issuesantitrustsprinttelecommunicationregulationlegalmobilegovernmentT-Mobile USAMergers and acquisitionsCarriers

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