Analyst says all four major carriers would win with T-Mobile-Sprint merger

Analyst says all four major carriers would win with T-Mobile-Sprint merger
Man, if we were given a nickel for each time that Sprint was rumored to be buying T-Mobile, we'd be sitting on Shark Tank next to Mark Cuban. The latest edition of this rumor has the backing of Barclays analyst Amir Rozwadowski. In a report to clients, Rozwadowski said that Sprint's underwhelming earnings report last week has management looking at a way to consolidate the industry. According to the analyst, Sprint management believes that combining T-Mobile and Sprint might be the best way to take on Verizon and AT&T.

Rozwadowski brings up an interesting point. Across the border in Canada, there are three major wireless operators and all three have an average revenue per user higher than the big four in the states. Their margins top those belonging to all of the major U.S. carriers, except for Verizon. A merger would allow the U.S. carriers to regain control of pricing power, according to Wall Street. Is three (as in three major carriers) the magic number?

A Sprint-T-Mobile deal would probably raise the valuations of Verizon and AT&T in the U.S. But such a deal will have its share of hiccups. How would such a deal be structured? SoftBank owns over 80% of Sprint, and has a high powered CEO in Masayoshi Son. T-Mobile has a pretty powerful parent of its own in Deutsche Telekom, which owns 65% of the U.S. company.


This could be one of those situations where subtraction actually results in addition. But will something real take place this time, or is this all talk as usual? What has prevented any deal from getting past the talking stage is the concern that U.S. regulators will shut down any transaction. However, there is a new sheriff in town and he is not quite so fond of regulations. This might be the best time to attempt a Sprint-T-Mobile merger as far as getting past the FCC and DOJ is concerned. And none other than T-Mobile CEO John Legere said last month that a Sprint-T-Mobile deal was possible.

source: Barron's

FEATURED VIDEO

27 Comments

1. Mreveryphone

Posts: 1817; Member since: Apr 22, 2014

From a coverage standpoint it makes sense... From a technological standpoint it be a nightmare to switch sprint over to gsm... Or would it??? Plus how many jobs would be lost with this transaction if it was to come to fruition...???

3. Furbal unregistered

The move to Lte makes the switch easier I believe. CDMA was on the way out in a few years already. Jobs would be unknown. There would be a lot of redundant positions. I wonder what it would do for plan rates and both sprint and T mobile are generally cheaper options...

17. joevsyou

Posts: 1091; Member since: Feb 28, 2015

CDMA should of been gone years ago.

18. andynaija

Posts: 1255; Member since: Sep 08, 2012

*should have

25. TheRequiem

Posts: 245; Member since: Mar 23, 2012

Just stop, CDMA was revolutionary for voice calling when it was originally introduced as it was far superior at handling capacity than anything else at the time and no one cares about 3g anymore... the whole world is moving to LTE and 5G and eventually CDMA, along with GSM, HSPA and every other 2G - 3.5G tech will be gone in a few years.

8. j_grouchy

Posts: 173; Member since: Nov 08, 2016

Well, all the worthless, unhelpful folks in all the Sprint store locations would be no great loss.

22. henrym11

Posts: 1; Member since: Feb 08, 2017

Preach preach

11. Soundjudgment

Posts: 370; Member since: Oct 10, 2016

It would be fantastic for coverage. Those still stuck with a CDMA model would continue to use the existing Sprint towers as they do now. But every NEW phone the combined ownership sells, would be LTE - GSM capable and that would be the model(s) they would sell from that point on... giving Sprint-users a great increase in cell-coverage as they upgrade to the latest models.

16. matistight

Posts: 981; Member since: May 13, 2009

Sprint is horrible so any buyout would be something they should do. Before they do bankrupt

21. QWIKSTRIKE

Posts: 1459; Member since: Mar 09, 2010

I own both services, sprint has better coverage period

23. remixfa

Posts: 14605; Member since: Dec 19, 2008

the coverage is overlapping. there would be extra frequencies availible to strengthen coverage.... when all the CDMA towers are decommissioned and turned into GSM-LTE. However, look at what he's saying. If TMOBILE is bought out by sprint, they can increase the average profit per user.. basically, drastically increase phone plans again. how is that good for the US consumer??? Screw this plan. I'm a capitalist, but this is straight up corporate greed trying to take out the one guy on the field that's having a net positive effect for consumers, not for corporate wallets.

2. Subie

Posts: 2355; Member since: Aug 01, 2015

This may very well be a win for the four carriers as the article states, but I doubt it would be a win for the consumers. They bring up the fact that Canada only has 3 major carriers, yet cell rates up north are nothing to brag about...

6. snatchlax17

Posts: 52; Member since: Dec 07, 2010

Cellular rates up north are absurd...It would suck to have that occur here as well.

24. remixfa

Posts: 14605; Member since: Dec 19, 2008

they want US rates to match canada's rates, is what the article is saying. They want to remove Tmobile, the only company putting downward pressure on rates. This article is about increasing profits, not competition or anything good for the consumer.

4. NexusX

Posts: 613; Member since: May 16, 2013

carriers win, consumers lose

5. snatchlax17

Posts: 52; Member since: Dec 07, 2010

Always the case...$$$

7. NexusKoolaid

Posts: 493; Member since: Oct 24, 2011

"A merger would allow the U.S. carriers to regain control of pricing power, according to Wall Street." Well for presumably not having power over pricing the carriers seem to have no difficulty in raising prices, fees and charges. I shudder to think what it would be like for us consumers when they do gain this control they're supposedly lacking.

9. j_grouchy

Posts: 173; Member since: Nov 08, 2016

No kidding. Good for THEM...but what about US?

10. Kelley71

Posts: 105; Member since: Nov 26, 2012

No, no, no, no, no, no, no. Hell no. Hell no and damn you for asking. NO! There are 5 agents when discussing major cell carriers--Sprint, T-Mobile, AT&T, Verizon and consumers. If the first four benefit from a merger, it will almost certainly be at the expense of the last one, consumers. Even if Legere leads the remaining company, less competition helps the oligarchs, not the plebs. Merging Sprint & T-Mobile puts tremendous pressure on Fi--now it's basically a run-of-the-mill MVNO. Google may not have the leverage when dealing with one company instead of two and have to shut Fi down, eliminating another cost-competitive carrier. We need more carriers, not fewer.

19. tyger11

Posts: 290; Member since: Oct 29, 2012

In general yes, in this case, no. T-Mo and Sprint don't (can't) compete in coverage due to lack of spectrum. Two crappy networks do not equal real competition, and do not force Verizon or AT&T to lower prices or offer better services. If it did, they would be cheaper and better, but they aren't. T-Mo and Sprint compete on price and in specific markets where they have decent coverage, and that's IT.

12. tyger11

Posts: 290; Member since: Oct 29, 2012

Depending on the results of the 600MHz auction, the combination of T-Mo and Sprint frequencies would be the only way to truly compete on coverage with Verizon & AT&T. If they put the combined company in the hands of Legere, I'm all for it.

13. MartyK

Posts: 1043; Member since: Apr 11, 2012

Oh hell no! Canada carries plans are high as hell!

14. Z.....

Posts: 355; Member since: Feb 01, 2017

TMobile as in EE will takeover soon. Getting 170mbs on TMobile.... Unbelievable...

15. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

This analyst can say whatever. I doubt the FCC or the regulatory agencies would allow it. The whole point of breaking ATT up, was they had to much power. Even though ATT has bought up a lot of smaller Bell's, they didn't buy all of them back. If they allow that, we will be screwed. The only way tis would is, the FCC forces Verizon to also go GSM. At this point all phones would have to be sold unlocked. The carriers would simply have nothing to use to fight other than cost. The best cost for the best package gets the most customers. If T-Mobile and Sprint keep the same rates, ATT and VZW would not go higher, because ether stand force people to Sprin-T-Mobile. After TMO because the Uncarrier, they got a lot of new customers, in the double digits I believe. T-MO charges less and make money by volume. ATT has the advantage of being a business carriers because they use GSM. But if they all were GSM, this would no longer be an advantage for ATT. If they only have to fight on the level of cost, they would get busted if they tried to fix prices. The problem is the FCC won't even the odds because the carriers would pay them to not regulate them that way. Which I why we have so many different bands to begin with. You have to consider other options. MetroPCS and Cricket aren't terrible. They just have terrible phones. But if 20M subscribers joined Cricket, they would have the cast=h to buy better phones.

20. tyger11

Posts: 290; Member since: Oct 29, 2012

What volume? A combined T-Mo/Sprint would still have fewer customers than Verizon or AT&T (each, not combined).

26. TheRequiem

Posts: 245; Member since: Mar 23, 2012

That's not really true, AT&T and Verizon have a little over 100 million respectively and Sprint and T-Mobile are the only carriers adding customers right now. AT&T and Verizon are losing customers. If T-Mobile and Sprint merge now, they would also have over 100 million. If you mean fewer, by like what, a few million? That would be a 1% difference in subscriber base and that's if T-Mobile and Sprint abruptly stop adding hundreds of thousands of customers like they have been in recent quarters. By the time a merger is completed, its likely they would be on par or have more subs than either AT&T and Verizon. I do not see the momentum stopping anytime soon. Sprint and T-Mobile have the best deals and their networks don't suck anymore.

27. tsp38

Posts: 38; Member since: Jun 04, 2015

I personally don't see what the big deal is with these two companies merging. T-Mobile and Sprint, on their own, can't compete with Verizon or AT&T so it's logical they would want to merge. going to 3 major companies from 4 is not something government should worry about, especially when there are plenty of other smaller companies in play.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.