SoftBank's $50B U.S. Investment News Likely Precusor to Spint (S)/T-Mobile (TMUS)/Dish (DISH) Merger - Oppenheimer

Yesterday, President-Elect Donald Trump tweeted about a meeting with Masayoshi Son of SoftBank where the executive promised to invest $50 billion in the US, with a focus on IoT, AI, deep learning/robotics. Oppenheimer analyst Timothy Horan believes the investments will all leverage wireless infrastructure and as a results sees T-Mobile (NASDAQ: TMUS) as likely "in play."

"We believe the meeting likely will be a precursor to a Sprint/T-Mobile/Dish merger to create a discounted quad-play service company with over 300 MHz of spectrum and OTT video that will attack the wireline broadband/ video market," Horan said. "This will require a $10 billion-plus capex build to create a highly connected/dense wireless network that can support 100 Gb usage per home per month and growing and new services mentioned by Son."

The analyst views T-Mobile as king maker in this process as the combined spectrum portfolio (along with DISH) would be close to 400MHz versus 100-150 for its competitors and would create a strong third US competitor.

He said if Sprint were to make a bid for TMUS, they would not be surprised to see a bid from Comcast (NASDAQ: CMCSA) or Charter (NASDAQ: CHTR )emerge, but given that TMUS/S/DISH are all majority owned, a counter offer would likely need to be very compelling.

Combining Sprint/T-Mobile/Dish would likely come with $10B + of annual synergies after a $10-$20 billion or so upfront capex build given the spectrum position, he said.

Horan views TMUS as the best way to play this deregulatory/technology driven consolidation.

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