New Sprint/T-Mobile M&A Talks Rekindle Interest in Telecom Sector

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As if there was not enough going on in the world, now investors and traders get to deal with the possibility that an on-again-off-again merger may be coming back to a theater near you. It may seem hard to imagine, but Sprint Corp. (NYSE: S) is rumored to be back in merger discussions with T-Mobile US Inc. (NASDAQ: TMUS).

Without getting into price discussions, and without getting into who will say what, the news is having a positive impact on all the major U.S. telecom and wireless stocks. After all, a three-way price war can be easier for corporations and managers to fight than a four-way one.

Shares of AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) hit intraday highs after the news reports of these market rumors. 24/7 Wall St. looked at the reaction of each company’s stock on Tuesday, and consensus data has come from Thomson Reuters.

Sprint shares rose the most, because it would of course be the likely target. Sprint was up 17% at $6.02, after trading up briefly as high as $6.40, and the trading volume was nearing three times normal with some 35.5 million shares having traded hands by 1:00 alone. Sprint has a 52-week range of $4.87 to $9.22, and its stock closed at $5.14 on Monday.

T-Mobile shares were last seen trading up 7.2% at $64.10, and it has a $54.6 billion market cap. T-Mobile has a 52-week trading range of $54.60 to $68.88 and a consensus target price of $73.54.

AT&T shares were up almost 3% at $36.0, and the market cap is $200 billion. AT&T’s 52-week range is $32.55 to $40.76, and the consensus price target is $40.40.

Verizon shares traded up almost 3% at $36.0, and the market cap is $235 billion. It has a 52-week range of $42.80 to $54.77 and a consensus analyst target of $56.08. Verizon’s dividend yield is 4.9%, and while that is lower than AT&T, it is deemed to have less going on in merger risk, and it is still the highest dividend payer of the 30 Dow Jones industrial stocks.

Remember, investors have gone through many rounds of Sprint and T-Mobile rumors. Regulators have questioned the deal due to it limiting competition, and there also has been reported strife regarding who would control what in a combined company. The rest of the rumor mill is up to investors and traders individually.

As with all rumors and reports based on “people familiar with the matter,” there is the great “caveat emptor” warning that better be taken into consideration.