As Sprint-T-Mobile Merger Possibility Grows... SoftBank Stock Soars

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The stock price of Japan's SoftBank Group surged on the 12th following news of the approval of the T-Mobile and Sprint merger. SoftBank holds more than 80% of Sprint's shares.

According to Bloomberg News, SoftBank's stock closed at 5,751 yen on the Tokyo Stock Exchange, up 11.89% from the previous trading day. During the session, SoftBank's stock price rose nearly 14% from the previous day to reach as high as 5,857 yen, showing a strong upward trend.

The boost in stock price was driven by the U.S. court's approval of the T-Mobile and Sprint merger. The Wall Street Journal (WSJ) and others reported on the 11th (local time) that the U.S. Southern District Court of New York in Manhattan approved the merger of T-Mobile and Sprint, the 3rd and 4th largest players in the U.S. mobile telecommunications industry. The lawsuit was filed by the attorneys general of 13 states including New York and Washington D.C., arguing that the merger would limit competition and lead to higher costs for consumers.

As the likelihood of the Sprint and T-Mobile merger becoming a reality increased, the possibility of SoftBank injecting funds into Sprint decreased, acting as a positive factor that drove the stock price up. Additionally, expectations for financial improvement arose as Sprint is expected to be excluded from SoftBank's subsidiaries.

T-Mobile and Sprint reached a merger agreement worth $26 billion (approximately 30.7 trillion won) in April 2018 and received approval from the U.S. Department of Justice and the Federal Communications Commission (FCC) last year. Once the merger is completed, the U.S. mobile telecommunications market will be reorganized into a three-player structure alongside Verizon and AT&T. Currently, Verizon and AT&T hold market shares of 34% each, while T-Mobile holds 18% and Sprint 12%.

Meanwhile, SoftBank announced its consolidated financial results for October to December 2019 on the same day, reporting a net profit of 55 billion yen, down 92% compared to the same period last year. SoftBank Chairman Masayoshi Son will hold a press conference regarding the earnings starting at 4 p.m. today.