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March 21, 2011, 8:16 AM EDT
By Ville Heiskanen
(Adds analysts’ comments starting in third paragraph. See {Ext3 } for more reports on the takeover.)
March 21 (Bloomberg) -- Sprint Nextel Corp. slumped as much as 15 percent in early trading after AT&T Inc. agreed to buy T- Mobile USA from Deutsche Telekom AG for about $39 billion, trumping Sprint’s effort to acquire the business.
With the T-Mobile USA purchase announced yesterday, AT&T would become the largest U.S. mobile-phone company. The deal still needs regulatory approval. Sprint also held talks with Deutsche Telekom about buying T-Mobile, people with knowledge of the matter said this month.
By acquiring T-Mobile, Sprint would have gained ground on larger rivals Verizon Wireless and AT&T. Now, AT&T could leave Overland Park, Kansas-based Sprint as a far weaker No. 3 player in the industry, said Rebecca Arbogast, an analyst for Stifel Nicolaus & Co. in Washington. Sprint shares may give up gains they made because of the expectations for a merger, said Jonathan Chaplin, an analyst at Credit Suisse Group AG.
“We thought Sprint would merge with T-Mobile,” New York- based Chaplin said in a note yesterday. “If the AT&T-T-Mobile deal is approved, Sprint is locked into the No. 3 position against a dominant AT&T and Verizon.”
Sprint shares declined as much as 75 cents to $4.30 in trading before the open the New York Stock Exchange, after closing down 1 cent to $5.05 on March 18.
The cost of insuring debt of Sprint rose 62 basis points to 315, according to CMA prices for credit-default swaps.
--Editors: Peter Elstrom, Ville Heiskanen
To contact the reporter on this story: Ville Heiskanen in New York at vheiskanen@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom in New York at pelstrom@bloomberg.net
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(Adds analysts’ comments starting in third paragraph. See {Ext3 } for more reports on the takeover.)
March 21 (Bloomberg) -- Sprint Nextel Corp. slumped as much as 15 percent in early trading after AT&T Inc. agreed to buy T- Mobile USA from Deutsche Telekom AG for about $39 billion, trumping Sprint’s effort to acquire the business.
With the T-Mobile USA purchase announced yesterday, AT&T would become the largest U.S. mobile-phone company. The deal still needs regulatory approval. Sprint also held talks with Deutsche Telekom about buying T-Mobile, people with knowledge of the matter said this month.
By acquiring T-Mobile, Sprint would have gained ground on larger rivals Verizon Wireless and AT&T. Now, AT&T could leave Overland Park, Kansas-based Sprint as a far weaker No. 3 player in the industry, said Rebecca Arbogast, an analyst for Stifel Nicolaus & Co. in Washington. Sprint shares may give up gains they made because of the expectations for a merger, said Jonathan Chaplin, an analyst at Credit Suisse Group AG.
“We thought Sprint would merge with T-Mobile,” New York- based Chaplin said in a note yesterday. “If the AT&T-T-Mobile deal is approved, Sprint is locked into the No. 3 position against a dominant AT&T and Verizon.”
Sprint shares declined as much as 75 cents to $4.30 in trading before the open the New York Stock Exchange, after closing down 1 cent to $5.05 on March 18.
The cost of insuring debt of Sprint rose 62 basis points to 315, according to CMA prices for credit-default swaps.
--Editors: Peter Elstrom, Ville Heiskanen
To contact the reporter on this story: Ville Heiskanen in New York at vheiskanen@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom in New York at pelstrom@bloomberg.net
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