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Sprint reportedly preparing bid to purchase T-Mobile in 2014

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Sprint store (STOCK)
Sprint store (STOCK)

Sprint, the third biggest wireless carrier in the US, is preparing to buy out its rival T-Mobile, according to a new report from The Wall Street Journal. While a potential deal is a ways off, Sprint is expected to put in its bid in the first half of 2014 and could pay more than $20 billion for its rival. While Sprint, which itself was recently acquired by Japan's Softbank, hasn't officially decided to go forward with such a move, a merger of the third- and fourth-largest wireless carriers could build a company large enough to rival the dominant forces of Verizon and AT&T.

Indeed, according to the WSJ, Softbank is a driving force behind the potential sale — the company reportedly wants to increase its footprint in the US wireless market beyond where Sprint currently sits. At the same time, T-Mobile parent company Deutsche Telecom has been rumored to want to exit the US wireless market entirely for some time — though the company appeared to pull back from that stance after AT&T failed to purchase T-Mobile in 2011. This potential deal could signal a renewed interest in Deutsche Telecom shedding its US wireless business.

Will the big four become the big three?

That said, such a merger would likely face a huge uphill regulatory battle; antitrust authorities could be concerned that the elimination of a fourth large nationwide wireless operator could be anticompetitive. It's been nearly two years since AT&T gave up on its plans to purchase T-Mobile, a potential deal that had been fraught with difficulty as the FCC decided that the merger was not in the public interest.

If Sprint did manage to purchase T-Mobile, it would have a combined postpaid subscriber base of about 53 million customers — still trailing far behind AT&T and Verizon. That might make regulators more likely to let the deal pass, but there's little doubt Sprint should gear up for a battle if it wants to make this purchase.

We've reached out to Sprint for comment and will update this post with anything we learn.