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Sprint and T-Mobile Merger: What’s Your Opinion?

March 16, 2014 | About:
Live Investor

Live Investor

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There’s been lot of talks about a possible Sprint (S) and T-Mobile (TMUS) merger. Where’s the relation between the two U.S. telecom giants headed remains a question. Would they continue to be compatriots or join forces together to make a new third entity in the wireless arena? Softbank CEO Masayoshi Son has been quite keen on T-Mobile.

The company entered the U.S. telecom market by virtue of its majority interest in Sprint. Softbank said that it targets to make the U.S. market more competitive by offering financial cushioning to Sprint so that it could effectively compete with Verizon (VZ) and AT&T (T). But Son says that it’s virtually impossible for the Kansas carrier to pose threat to the tyranny of the two biggies given its tiny size compared to the two. Thus he proposes a merger with T-Mobile which according to him would create a stronger third player in the market. But the FCC has a different take on the same.

What does the FCC have to say?
The regulator’s reaction is nothing surprising. After Son met the Federal Communications Commission (FCC) to convince them about the prospects of the proposed deal, Reuters reported that FCC chairman Tom Wheeler wasn’t quite impressed and had dubious thoughts on it.

The FCC has not really had a good history when it comes to agreeing to a merger involving two big players. We have seen that in the past in 2011 when AT&T had a mind to acquire T-Mobile and offered a $39 billion deal. The deal fell through as the FCC and the Department of Justice (DoJ) didn’t agree saying that the transaction would kill wireless competition. So whether or not Son’s proposal would receive FCC’s blessing stays a question.

Let’s see what T-Mobile has to say.

T-Mobile speaks
T-Mobile CFO Braxton Carter promoted the merger proposal saying that “a third-scale national player that has the scale benefits with the right business model could be very competitively enhancing in the U.S.”. If the Kansas carrier acquires T-Mobile the total subscriber base would receive a tremendous boost. Presently Sprint has around 53 million subscribers, but if T-Mobile’s customer base is added to it then it would stay tad away from the bigger rivals.

Carter also nattily hints at the U.S. spectrum auction which he believes is more dangerous and biased towards bigger players AT&T and Verizon that have solid finance than the Sprint-T-Mobile merger. The merger isn’t as harmful as the regulators think; rather it would improve the combined entity’s ability to fight for spectrum at the auction.

What are Verizon’s and AT&T’s thought on the same?
AT&T is quite sure that the deal wouldn’t receive a go-ahead signal from the regulators. This is a lesson it’s learnt from its past experience when it intended to acquire T-Mobile. The company CEO John Stephens said that he’d rather be taken aback if he learns that the regulators have passed the proposal.

Verizon CEO Shammo had very little thoughts to share. The only point he highlighted was that the wireless industry ideally needs four national carriers. Also consolidation would lead to concentration of airwaves in the hands of the new entity.

The takeaway
The deal would have to face FCC’s strict regulatory procedure. This would only be possible if Son can strongly convince that the merger would not only prove better for the wireless industry but also leave the industry more competitive.


Rating: 0.0/5 (0 votes)

Comments

todoin2007
Todoin2007 - 9 months ago

The FCC, to best perform its fiduciary relationship to the American consumer, wants to increase competition. What better way to do this than to allow a company to be created that can effectively compete against the current duopoly of VZ and T?

S wants to disrupt the the cable and satellite broadband business model as well as the mobile market. They are innovating and laying the groundwork with their Spark LTE broadband wireless router. Son has a global perspective in regard to economy of scale, handsets, frequencies and standards.

Even without TMUS, Sprint is still the best cell and data value currently available. Read all the other carrier's offers, including the fine print on new phone costs and possible overage charges. Do the math. Sprint is the best value for your dollar in unlimited data and cell service.

Spark kills the competition here in NYC. I just got 43 Mbps down and 14 up. T, TMUS and VZ can't come near to matching that. Even TWC wired broadband has a problem matching that in many areas. Sprint's network is definitely getting better.

Plus I like that Sprint is a leader in 'green' business operations. This means a lot to me. Their phone buyback program was recently rated number 1 in the country.

I am a demanding customer and have always been pleased with Sprint's customer service. I can't say the same about T and VZ. Over the years I have been a customer of both. CS issues are why I left them and ultimately went to Sprint.

Sprint gives you 14 days to try their service and if you are not getting a good signal you can return everything and cancel your contract with no fees. That is an awesome way to try before you buy.

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