T-Mobile might merge with Sprint or buy US Cellular in 2017, says Morgan Stanley

T-Mobile is a carrier worth watching in 2017

Rumors of a possible merger between two of America’s biggest carriers, T-Mobile and Sprint have been floating around for quite some time. A previous attempt by Sprint to buy the Magenta carrier fell through in 2014, after the Federal Communication Commission intervened.

But Morgan Stanley analyst, Simon Flannery believes the two companies might join forces in 2017.

The research firm sees T-Mobile as being a strong strategic position, so the carrier might want to take advantage of it by doing something bold. Like merging with Sprint.

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According to Morgan Stanley this would be best scenario, although it’s the least likely possibility from all the options available to T-Mobile at this point.

Flannery points out that the scenario would bring about “significant savings from network, distribution, customer care, rationalization, reduced churn, avoided capex and spectrum purchases”, although he does warn against the long regulatory reviews given anticompetitive concerns are bound to pop up.

But T-Mobile might not want to have anything to do with a rival saddled with so much debt. Instead, the carrier might prefer a deal with cable company Comcast Corp. Apparently Comcast is expected to make its MVNO debut in 2017 using Verizon’s LTE networks and its own Wi-Fi hot spots.

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A cable merger would likely be viewed very positively for tower stocks,” says Flannery.

Another scenario sees T-Mobile in the buyer position. Flannery believes the Magenta carrier might consider buying U.S Cellular, although the latter might not want to sell its business. The case of the third largest carrier buying the fifth largest might easily raise some objections with regulatory agencies.

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Flannery’s last scenario envisions T-Mobile being interested to merge with a fiber provider such as Zayo – one of the last remaining independent fiber providers of scale.

We should note, these are all predictions and nothing more and it remains to be seen if any of them will even translate into real life events.

But when the Sprint and T-Mobile deal is concerned, many investors and analysts believe the odds of the merger happening are much higher under the Trump administration.