SoftBank Shares Jump 13% Ahead Of Quarterly Earnings Report, Follow Sprint, T-Mobile Merger News

The shares of SoftBank Group Corporation SFTBY surged in early Wednesday trade in Tokyo as a United States judge approved the merger of its troubled telecommunications carrier subsidiary Sprint Corporation S with T-Mobile US Inc. TMUS.

What Happened

A federal judge on Tuesday approved the merger of the United States's third and fourth-largest telecom carriers.

T-Mobile had paid $26.5 billion to Sprint stakeholders in an all-stock deal in 2018. Multiple state attorneys protested the merger on anti-competitive grounds that the judge rejected in the ruling.

The resultant merged company would still be the third-largest telecom carrier in the U.S., but would closely compete with the larger two carriers AT&T Inc. T and Verizon Communications Inc. VZ.

Why It Matters

Sprint has been in losses for nearly a decade, and the company's CEO told the court during the trial that it offers "an inferior product" that will keep it in a cycle of losses if the court doesn't approve the merger, the Wall Street Journal reported earlier.

The merger deal is good riddance for the SoftBank Group, which otherwise faced the possibility of needing to inject more funds in yet another troubled investment, as noted by Bloomberg last year.

The holding company's founder and CEO Masayoshi Son faced embarrassment last year as his bet on co-working space company WeWork failed to pay dividends. The company also suffered losses from its investment in ride-sharing company Uber Technologies Inc. UBER.

Price Action

SoftBank's shares traded 13.68% higher at $53.19 in Tokyo at press time on Wednesday. The shares closed 12.4% higher at $26.46 in the otc market on Tuesday.

Sprint's stock closed Tuesday 77.50% higher at $8.52, and T-Mobile closed 11.78% up at $94.49. Both stocks traded mostly flat in the day, both in the regular session and the after-hours session, after carrying on the gains from Monday's after-hours surge.