Sprint steps closer to T-Mobile merger, secures $40bn financing

Sprint has lined up multiple banks to fund the proposed acquisition of T-Mobile US in a deal that would merge the country's third- and fourth-largest mobile operators.

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Sprint has come closer to securing enough funding to finance its proposed acquisition of T-Mobile US.

The telecommunications firm has held talks with eight banks willing to finance the deal, according to Reuters. Citing people familiar with the matter, the publication says the debt package would give Sprint over $40 billion, plus a bridge loan of approximately $20 billion from Japan's SoftBank — on top of roughly $20 billion to refinance T-Mobile's existing debt.

JPMorgan Chase & Co, Goldman Sachs Group, Deutsche Bank AG, Bank of America Merrill Lynch, Citigroup, Mizuho Financial Group, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Financial Group are all banks that have agreed to finance the acquisition, according to the publication.

The financing terms are due to be finalized in the coming month, and it is expected that the T-Mobile-Sprint merger will be formally announced in August. A potential buyout is valued at roughly $50 billion, with shareholders gaining roughly $40 a share.

In T-Mobile's first quarter earnings report , the carrier said it accounts for 49.1 million customers, up 2.4 million in the previous quarter. The company's 'Uncarrier' plans — designed to lure subscribers away from its rivals — contributed to the upsurge in business; while Sprint lost 231,000 postpaid subscribers in Q1 and 383,000 overall. In total, Sprint accounts for roughly 53 million subscribers, but T-Mobile is closing the gap.

Despite the vast subscriber numbers, both T-Mobile and Sprint are losing money. T-Mobile lost $151 million on revenue of $6.87 billion in Q1, and Sprint also had a net loss of $151 million on revenue of $8.87 billion.

If the merger takes place, aside from regulatory and antitrust concerns, the combination would create a stronger entity perhaps able to compete with Verizon and AT&T, the largest carriers in the United States.

OpenSignal's the State of LTE in the US in February 2014 report suggests that in the United States, T-Mobile generally offers the best speeds at an average rate of 11.5 Mbps, while Sprint is one of the slowest at only 4.3Mbps.