Number 3 and 4 of the nation’s largest cell phone carriers have begun discussions exploring an agreement – again. Speculations about a potential merger between the two behemoths, T-mobile and Sprint, have been doing rounds along with expectations that the regulators under President Trump’s administration could be more willing to allow combinations as compared to the Obama administration.
This is to be expected considering the first attempt for such a deal fell through under the FCC under Tom Wheeler and the Obama administration, considering both sides have not been able to hold a conversation for a long time due to the recent spectrum auctions which were dominated by T-Mobile. However, the quiet period came to a conclusion on 27th of last month leaving Softbank and Deutsche Telekom which are the parent corporations of Sprint and-T-Mobile respectively, free to once again hammer out the terms of an agreement.
Mutual considerations for the Merger
CEO of T-Mobile John Legere has hinted numerously at a possible meshing of the two firms. He addressed a crowd of reporters at CES, claiming a merger could be a potential outcome of President Trump’s administration.
He again seemed to be on board with the concept during an interview with Bloomberg TV. He is not alone in his sentiments; it seems the inclinations are mutual. Softbank, Sprint’s parent company, was more specific with Chief Executive Masayoshi Son naming T-Mobile as the most orthodox choice so to speak for a potential merger.
Both Telecom and cable company acquisitions have been frowned upon in the recent months considering the high stakes airwaves auction being conducted by the Federal Communications Commission. Now that the auction is at an end, analysts are declaring a frenzy of merger potentials in the coming period. In spite of the change concerning the administration, a deal may face hurdles in Washington.
What a merger could mean
During 2014, Sprint’s bid for the purchase of T-Mobile was not feasible because of the concerns of the regulators the acquisition may, in turn, hurt the competition through the elimination of a significant wireless carrier. Instead of having some competitors nationwide, the market oriented for cell phone service could be reduced to three major players. As such, a combination between Sprint and T-Mobile is not going to change the result.
The merger between Sprint and T-Mobile is going to grant the combined firm a bigger space, and this may help it compete against Verizon and AT&T. This is the argument Sprint made to the regulators in 2014. However, T-Mobile is already well against these firms, and its CFO Carter Braxton has already hinted that buying a cable firm could better serve the long-term interests for T-Mobile.
Though if things move forward with Sprint, one main query is who would lead the firm. Sprint has been relegated to one of the least performing big carriers and is often ridiculed. Putting the brand to bed and investing everything on the ‘Uncarrier’ movement by T-Mobile could be the best thing to do. However, the decision still lies with Deutsche Telekom and Softbank.