Sprint and T-Mobile look at $32 billion US merger to fend off the really big boys

But this week , the two sides have settled on the terms of a $32 billion deal likely to be announced this summer, the New York Times said, quoting people briefed on the matter.

Sprint would acquire T-Mobile for about $40 a share in cash and stock, a 17 percent premium to Wednesday’s price, said the NYT.

Talks are incomplete and could still fall apart. “But the agreement on terms represents a turning point in a relationship between two companies that have long contemplated a merger,” said the Times.

Reason: The companies’ two main rivals, Verizon and AT&T, each with more than 100 million subscribers, continue to grow more formidable.

Verizon agreed to take full control of Verizon Wireless last year in a $130 billion deal with Britain’s Vodafone. Verizon is the largest wireless operator in the country and also provides landlines, cable television and business services.

AT&T, the second-largest wireless provider, recently agreed to acquire DirecTV in a $49 billion deal, giving it control of the largest satellite television operator in the US.

Sprint and T-Mobile are both majority owned by large, international telecommunications groups. T-Mobile is 67 percent owned by Deutsche Telekom of Germany. Under the proposed deal with Sprint it would own just 20 percent of the combined firm.

Sprint is majority owned by SoftBank, the Japanese group controlled by the billionaire Masayoshi Son. Mr. Son, known as Masa, is an entrepreneur who has already reshaped Japan’s wireless industry. The Times says he has made "no secret of his ambitions to do the same thing in the United States."

Should it be announced this summer, a deal to combine Sprint and T-Mobile would surely face regulatory scrutiny, said the NYT. Antitrust officials at the Justice Department are already considering the implications of Comcast’s proposed acquisition of Time Warner Cable, and AT&T’s proposed deal for DirecTV.

AT&T tried to buy T-Mobile three years ago but regulators effectively killed the deal, in the belief that it would have been bad for consumers because it would have reduced their choices.