Softbank looking potentially to consolidate the operations of T-Mobile & Sprint

If Softbank has its way, a merger between the two U.S. wireless telecom operators are in the cards.

With Reuters reporting that Japanese SoftBank Group Corp is preparing to cede control of Sprint Corp to T-Mobile US Inc in order to clinch a merger of the two wireless U.S. carrier, the shares of Softbank rose by 3% today.

According to sources familiar with the matter at hand, SoftBank is likely to approach Deutsche Telekom AG, T-Mobile’s parent, for negotiating the potential merger of both wireless carriers.

This potential deal, termed as the “Berkshire Hathaway of the tech industry,” by SoftBank founder Masayoshi Son marks a strategic shift in Softbank’s portfolio as the telecom services market mature with cutting edge investments.

The proceeds of the complete or partial sale of its holdings in Sprint to a third party, is likely to boost SoftBank’s credit rating and “allow it to dedicate more of its managerial and financial resources to growth businesses,” said analysts at SMBC Nikko Securities said in a research note to clients.

SoftBank’s domestic mobile business has remained a cash cow enabling it to fund investments, said analysts. Sprint may find it challenging to grow on its own since it lacks the scale of its larger rivals.

Earlier this month Son had stated, three years ago he was focused exclusively on acquiring T-Mobile. But with Sprint now in the black, various new options have now opened up for SoftBank for realigning the telecom industry.

Son’s previous attempt to merge Sprint and T-Mobile had fallen through due to opposition from U.S. antitrust regulators.

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