|Katie Collom |||Jun 05, 2014 06:17 AM EDT|
(Photo : phandroid.com)
Sprint and T-Mobile, the third- and fourth- largest wireless phone companies in the US, have reportedly reached an agreement in their long-anticipated merger.
Sources privy to the negotiations say Sprint has agreed to around $40 per share to purchase T-Mobile, making the mobile phone firm worth more than $32 billion.
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However, the sources say a lot of further negotiations are needed before the two can completely reach an agreement. Softbank, which owns 80 percent of Sprint, was willing to make an offer in the upper $30s per share while Deutsche Telekom, which owns around 67 percent of T-Mobile, was seeking a deal of around $40 per share.
It's been rumored for months now that Sprint would make a bid for T-Mobile, both companies having argued that a merger would help to create a large No. 3 rated wireless company which could effectively compete with giants AT&T and Verizon Wireless.
The two companies have felt the threat of the ever-growing top two wireless companies and AT&T recently sealed a monumental deal when it acquired Direct TV for $49 billion, giving it control of the nation's largest satellite TV operator.
A merger between Sprint and AT&T would have the added benefit of allowing the companies to reduce prices by eliminating redundant systems and other unnecessary costs - making them more competitive as a result.
Experts argue that neither of the two have the financial backing on their own in order to serve as potent competitors against far larger players in the same industry, and as of such also cannot afford to offer the same services that their bigger rivals can.
Sprint and T-Mobile have argued in favor of the merger, believing that the only way they can stay relevant in a business dominated by behemoths is by merging.
Regulators, on the other hand, seem reluctant to approve such a deal as it is preferable to keep four nation-wide competitors on the market instead of just three.
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