“This isn’t a case of going from 4 to 3 wireless companies—there are now at least 7 or 8 big competitors in this converging market" - Mr. Legere
As wireless companies are racing towards 5G service, some of them (Sprint) are struggling to survive among the competition. After several blocked attempts at a merger between Sprint and T-Mobile, there is reason to believe that this time will different:
It is the third time in recent years that the two rivals have attempted the combination. But the leaders of both companies are determined to close a deal, if only because their prospects going it alone grow dimmer by the year.
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In 2014, the then head of the Federal Communications Commission made clear that having four national providers was necessary to ensure competition and lower prices for consumers. That forced Sprint and T-Mobile to abandon their plans to combine. The current FCC chairman, Republican Ajit Pai, hasn’t drawn the same line about the number of national providers.Sprint and T-Mobile executives could make the case that times have changed. Investments in 5G infrastructure could blur the lines between cellphone provider, cable company and technology firm. Even using current technologies, Comcast Corp. has rolled out low-cost wireless service to its cable customers that rides on Verizon’s network.
The proposed deal splits ownership among parents Deutsche Telekom (42%) and Softbank Group (27%), with the remainder going to the public (31%).
According to the article, the merger would cut infrastructure costs and have a "net job positive" effect. This would allow T-Mobile/Sprint (to be called T-Mobile) to compete with giants Verizon and AT&T in laying the groundwork for 5G technology.
Do you think a merger will pass regulators this time?
Is this the right strategy for these companies?
Thoughts?
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