Thursday, October 4, 2012

Sprint Down And Down

Yesterday Deutsche Telekom, parent of T-Mobile, announced that it was entering negotiations to purchase MetroPCS. The stock price of telecom rival Sprint, which backed out of the acquisition of MetroPCS earlier this year, fell on the news. Today, a report by Bloomberg announced that Sprint was considering a counter-bid for MetroPCS. So what would you expect happened to Sprint shares on this announcement? The stock fell by an additional 3 percent. One interpretation is that the market views a T-Moblile/MetroPCS merger as a negative for Sprint, but a Sprint purchase of MetroPCS as even more negative, possibly because Sprint may be forced to overpay for MetroPCS in a bidding war.