Updated July 15, 2014 3:40 p.m. ET
Sprint Corp.
S +0.49%
Sprint Corp.
U.S.: NYSE
$8.15
+0.04
+0.49%
July 16, 2014 1:52 pm
Volume (Delayed 15m)
:
5.14M
P/E Ratio
N/A
Market Cap
$31.99 Billion
Dividend Yield
N/A
Rev. per Employee
$702,579
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and
T-Mobile
TMUS +0.36%
T-Mobile US Inc.
U.S.: NYSE
$32.22
+0.12
+0.36%
July 16, 2014 1:52 pm
Volume (Delayed 15m)
:
2.20M
P/E Ratio
N/A
Market Cap
$25.77 Billion
Dividend Yield
N/A
Rev. per Employee
$665,450
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US Inc. are working on a plan to raise roughly $10 billion to spend in an auction of wireless airwaves, people familiar with the matter said.
The companies, which have been discussing a possible merger since last year, are planning to form a joint venture that will bid in a 2015 auction of airwaves held by television broadcasters, the people said.
The funds are part of a roughly $45 billion financing package being put together by
SoftBank Corp.
9984.TO +0.79%
SoftBank Corp.
Japan: Tokyo
¥7753
+61
+0.79%
July 16, 2014 3:00 pm
Volume (Delayed 20m)
:
7.85M
P/E Ratio
16.73
Market Cap
¥9235.48 Billion
Dividend Yield
0.52%
Rev. per Employee
¥94,782,900
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to finance Sprint's acquisition of T-Mobile, the people said. SoftBank acquired Sprint last year for $22 billion.
T-Mobile would oversee the venture, a concession from Sprint Chairman
Masayoshi Son
during the merger talks, people familiar with the matter said.
An announcement of the merger could come this summer, people familiar with the matter said. The parties are expecting a protracted review process after regulators have expressed their opposition to the deal.
The joint venture, which would only be used if a transaction is still pending before regulators, is just one idea under consideration and it could change as talks continue, one of the people said. The final details of the $45 billion financing are subject to change, another person said. It wasn't clear how the spectrum would be divided between the companies if the deal is blocked.
The arrangement would help the companies participate in the auction without running afoul of rules that discourage collusion.
If Sprint and T-Mobile jointly spend $10 billion as currently envisioned, it would exceed the $9 billion outlay
AT&T Inc.
T +0.51%
AT&T Inc.
U.S.: NYSE
$36.42
+0.18
+0.51%
July 16, 2014 1:52 pm
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:
11.70M
P/E Ratio
10.60
Market Cap
$188.10 Billion
Dividend Yield
5.05%
Rev. per Employee
$534,453
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has earmarked for the auction.
The Federal Communications Commission is seeking to buy airwaves used by television broadcasters in a reverse auction, and then resell them to wireless carriers in a forward auction. It is a complicated process and the first time such an idea has been tried, the FCC said.
Wireless carriers need the airwaves, also known as spectrum, to fuel the blistering demand for mobile data such as streaming videos and music.
The FCC says it is considering setting specific rules governing joint bidding arrangements, and any companies that plan to bid jointly will need to file well before the normal deadlines.
Broadcasters have been concerned the FCC wouldn't raise enough money to make selling their spectrum worthwhile. If
Verizon Communications Inc.
VZ +0.51%
Verizon Communications Inc.
U.S.: NYSE
$50.97
+0.26
+0.51%
July 16, 2014 1:52 pm
Volume (Delayed 15m)
:
7.76M
P/E Ratio
11.38
Market Cap
$210.00 Billion
Dividend Yield
4.16%
Rev. per Employee
$689,751
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were to bid a similar amount to its rivals, the auction could take in at least $30 billion, setting it up to be the most successful auction to date. The last auction, in 2008, raised $19 billion.
The bulk of the proceeds of the 2015 auction would be used to reimburse broadcasters, help build a nationwide public-safety network and lower the national deficit.
The spectrum being soldtravels farther and penetrates buildings better than spectrum at higher frequencies. That means carriers don't need to build as many cell sites to cover the same area.
For months, smaller rivals T-Mobile and Sprint fought industry giants AT&T and Verizon over rules governing how the companies would be allowed to bid.
Verizon and AT&T already control the majority of low-frequency spectrum in use. Sprint and T-Mobile control very little, and they pushed the FCC to restrict the amount AT&T and Verizon would be allowed to buy.
The Justice Department sided with T-Mobile and Sprint, and said in a May FCC filing that setting aside some spectrum for smaller carriers "could improve the competitive dynamic in the wireless market and benefit consumers."
The Justice Department also said it was worried that larger carriers would have an incentive to buy all the spectrum simply to keep it out of rivals' hands. But the FCC ultimately set aside fewer airwaves than Sprint and T-Mobile initially hoped.
It isn't clear how much broadcasters will ultimately make available in the auction, but if 60 megahertz is raised in each market, only 20 megahertz of that would be reserved for smaller carriers such as T-Mobile and Sprint to fight over while AT&T and Verizon would likely get 20 megahertz each.
Sprint and T-Mobile thought the FCC's decision helped their case for a merger, according to people familiar with the matter. By not setting aside enough spectrum to ensure both carriers could acquire the most desired amount, the companies could argue merging would be the best way to get it, people familiar with the matter said.
The FCC, in a clear reference to Sprint and T-Mobile's possible tie up, has said it would consider scrapping those set-asides if a transaction is proposed "affecting the top four nationwide providers," according to its ruling.
Separately, billionaire hedge-fund manager
John Paulson
on Tuesday expressed his support for the potential merger between Sprint and T-Mobile, offering an influential voice that played a prominent role in last year's round of telecommunications deals involving both companies.
Mr. Paulson's fund—the fourth-largest shareholder in T-Mobile and the third-largest in Sprint—said he isn't likely to raise complaints about the terms of the deal, saying if Sprint were to pay in the high $30s to low $40s a share for T-Mobile, that would be "reasonable."
—Gillian Tan, Gautham Nagesh and Thomas Gryta contributed to this article.
Write to Ryan Knutson at ryan.knutson@wsj.com
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