The T-Mobile and Sprint Merger Isn't a Done Deal: Who Buys Sprint If It Falls Apart?

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Rumors are spreading that the merger being negotiated by T-Mobile (NASDAQ: TMUS) and Sprint (NYSE: S) is hitting a rough patch right now, months after the companies first started talking and just as the two were expected to expected to seal the deal

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According to reports, Sprint majority stakeholder SoftBank Group, and T-Mobile parent Deutsche Telekom AG can't agree on how much control each would receive in the deal; CNBC is reporting Deutsche Telecom's management may visit SoftBank CEO Masayoshi Son this weekend to smooth things over. 

You may remember that Sprint and T-Mobile considered a deal back in 2014 that would have resulted in Sprint buying out T-Mobile, but those talks ended when the prospect of a merger met with strong resistance from regulators. If the Sprint and T-Mobile deal falls apart for good this time, it's unlikely the nation's third and fourth-largest wireless carriers will try again a third time.

As Sprint and T-Mobile try to keep their merger talks alive, let's take a quick look at two possible alternatives for Sprint if the deal doesn't work out.

Mobile's loss could be cable's gain

Comcast (NASDAQ: CMCSA) could be a strong contender to make a bid for Sprint, mainly because the cable company just jumped into the mobile wireless business earlier this year. Comcast only offers wireless services to its Xfinity Internet subscribers, and buying Sprint would significantly expand the cable company's reach. 

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And even if Comcast doesn't want to become the nation's fourth-largest wireless carrier, the cable company could always purchase some of Sprint's spectrum, and sell it off later. Comcast made a similar move several years ago when it bought up wireless spectrum and later sold it to Verizon.

What we do know is that Comcast is looking for new areas of growth as pay-TV subscriber numbers continue to decline. Research from Kagan estimates that by 2021, traditional TV providers will have lost 11 million subscribers nationwide. 

One hang-up for a potential Comcast deal is that it would need to be approved by Charter Communications (NASDAQ: CHTR). Like Comcast, Charter announced plans for a mobile wireless service for its customers, and the two have teamed up, in a sense, to ensure they can test the mobile waters without competition from each other. To that end, they agreed that neither would make any wireless acquisitions without the other's consent. 

This could also open up another opportunity for Sprint, where both Charter and Comcast buy some of Sprint, and the mobile carrier uses the cash to continue building out its business. Charter and Comcast had pursued a similar scenario over the summer, but it never materialized as Sprint opted to pursue a deal with T-Mobile. 

A possible DISH Network deal

It's also possible that Sprint could get snatched up by DISH Network (NASDAQ: DISH). DISH been aggressively buying up swaths of wireless spectrum -- it purchased $6.2 billion worth in the latest wireless auction alone. So there's been lots of talk about DISH either buying or being bought by a wireless provider, and a collapse of the Sprint/T-Mobile deal would only fuel further speculation.

DISH is expected to launch an Internet of Things network -- for bringing small, data-sipping devices online -- in the next few years, but a deal with Sprint would instantly make DISH a key player in the mobile market, and give it even greater opportunities to utilize its wireless spectrum. 

More waiting ahead

Though it looks like T-Mobile and Sprint are trying to salvage their deal, anything could happen at this point. What's clear, though, is that Sprint is very interested in being bought. The carrier has worked hard to improve its business recently -- Sprint posted its highest operating income in 10 years in its latest quarter -- but the company's position in the U.S. wireless market isn't nearly as strong as it used to be. Sprint isn't likely to give up on the idea of being acquired if its deal with T-Mobile were to fall apart -- again. 

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.