If the all-stock transaction does push through, T-Mobile’s parent company would be in a good position to not only save on costs but also benefit immensely from the scale of the resulting merged business entity without having to expend billions of dollars. As projected by Moody’s Investors Service report, a T-Mobile-Sprint merger could translate to cost savings of $3 billion for Deutsche Telekom.
In terms of scale, the combined spectrum holdings of the two major US wireless carriers would be massive, allowing the resulting merged entity to aggressively price its mobile offerings. T-Mobile and Sprint are currently the third and fourth biggest carriers in the US market, behind only industry leaders Verizon Wireless and AT&T. If merged, T-Mobile and Sprint could form a two-headed monster that will challenge the duopoly’s dominance.
But some believe that having three national wireless carriers instead of four poses some risks to the industry. Among the Big Four, Sprint is considered by many as the most affordable, and its presence in the market is perhaps the only thing that pressures T-Mobile to keep its pricing below that of Verizon and AT&T. BGR cites Canada as an example -- the country only has three national carriers, and its consumers on average pay some of the highest wireless costs of any mobile market in the world.
Although the US and Canada have similar demographics, there is no guarantee that the former will transform into the latter in terms of wireless costs. And it is worth remembering that the deal has not been made official yet. And if it does become official, any merger will still be reviewed extensively by the US government.
Source: BGR
So does this mean T-mobile would own Sprint, or would they carry on as separate brands under one roof?
ReplyDeleteIf the deal happens as Handelsblatt envisions, T-Mobile will own Sprint. What it does with Sprint brands will be up to T-Mobile, but in most acquisitions, the acquired company's brands eventually disappear.
DeleteTry living in the sticks with TM & Sprint they are worthless. ........
ReplyDeleteI live in the sticks and both work well for me, but TMO has better latency.
DeleteI too live in the sticks and T-Mobile has better coverage than Verizon.
DeleteYou must not live in western U.S. because TM & Sprint coverage is still awful in the year 2017 in most of the rural western U.S. Go outside any city and you'll have next to no coverage unless you're driving along the Interstate. Even then it's spotty at best.
DeleteSomeone FAILED Econ 101.
ReplyDeleteIn what world, without government price controls, will Three Major Cellular Providers, rather than Four, lead you to lower prices/a higher level of competition/product differentiation?
Radio spectrum is a finite resource, when/if it is concentrated with three providers, rather than four, there will be less reason to compete on price and the price of service will rise.
Remember, in the free market nothing is priced based on the cost to produce. Price is based on what people are willing to pay. Don't believe me? Annually Apple, with about 20% of the cellphone market, makes more money selling the iPhone than -all- the Android makers combined.
Well said! When you factor in the relative lack of wired infrastructure in the US, the risk of allowing this merger grows even more clear. It must be blocked.
DeleteWithout a merger Sprint will die anyway, so it will be 3 Cell carriers regardless.
DeletePS, price control never ever worked on anything, the products just is not being produced/sold/serviced anymore, so you a have a price, but nothing to buy.
Sprint will survive on its own. But, if necessary, the cableco's will buy it and 4 carriers will be preserved.
DeleteComcast & Charter should jointly buy either Sprint or T-mobile and operate it together,semi-autonomously. Both VZ and Att have great back-haul/fiber in the ground capabilities, which, both Sprint and T-mobile lack and need.
Delete"Well said! When you factor in the relative lack of wired infrastructure in the US, the risk of allowing this merger grows even more clear. It must be blocked."
DeleteNo compelling case can be made for government intervention in this. It's the business of Sprint and T-Mobile shareholders, not that of ignorant, arrogant, and unqualified outsiders.
The cable companies don't want to buy a carrier with limited coverage like Sprint or T-Mobile. They'd rather lease access from one of the carriers with better coverage and save themselves the costs of building out a network.
DeleteSprint is stuck in decades ago with Murphy Brown and a signal so bad you had to drop a bowling pin in order to be heard over it
DeleteSeems many posters here have failed econ 101. Hopefully, the FCC will stop this merger as it is an assault on the consumer and the employee.
Delete"Hopefully, the FCC will stop this merger as it is an assault on the consumer and the employee"
DeleteActually, such matters, which have nothing to do with the actual airwaves and communications, are not covered by the mission of the FCC.
"The Federal Communications Commission regulates interstate and international communications by radio, television, wire, satellite, and cable in all 50 states, the District of Columbia and U.S. territories. An independent U.S. government agency overseen by Congress, the Commission is the federal agency responsible for implementing and enforcing America’s communications law and regulations." - official mission statement from the FCC's own web site.
Of course, there is nothing in there about authorizing government to clumsily micro-manage business matters which have absolutely nothing to do with airwave transmissions.
We do still have a nation of laws, not of unlimited power-lust and greed by bureaucrats. Or so I hope.
Not the FCC's circus, not its monkeys.
DeleteThe FTC, not the FCC, is the primary government agency responsible for regulating competition and approving acquisitions and mergers. When one of the parties involved is a foreign company, like Deutsche Telecom, the approval of State Dept. is also needed.
DeleteRegardless if it is the FCC or FTC the merger needs to be stopped.
DeleteThe difference is very important. The FCC has no standing to do anything like this. Regardless, I think this merger is the business of Sprint and T-Mobile and its shareholders.
DeleteWhether or not you or I think it is good, it is simply not our business. And I have yet to see a good case that anything of this warrants any government intervention. However, I have seen a lot of bad invalid cases made against the merger and reasons to stop it.
I agree that we need four carriers to keep prices as low as possible but Sprint will probably end up going out of business if someone doesn't buy them
ReplyDeleteI like the merger but the price will go up that what i don't like.
ReplyDelete"I like the merger but the price will go up that what i don't like."
DeleteIt looks like a decade ago there were more wireless carriers than there are now. Would you say prices are higher now, 10 years later, with fewer companies?
Of course not. Prices for minutes and data have plummeted. The thing about your statement is that it sounds nice... at least until one looks at what really happens.
I am against this merger. It will not be good for competition. Maybe good for the corporation, but not god for the consumer.
ReplyDeleteI guess the higher ups don't care about the business owners who own boost/metro stores. the only reason the customers get free phones is due to most stores having a 50% switch rate from and to metro boost. After this merger, All this customers complaining on this forums about the free phones will have even more to complain about. The free phone when you switch will be a thing of the past. And expect all prepaid prices to rise dramatically
ReplyDeleteI don't want this merger because prices will go up and there won't be anymore competitive plans/services. Tons of people will lose their jobs, stores will close, layoffs of nearly 5-10K, and we still won't see a competitive network for 3-4 years.
ReplyDeleteSprint had 30B in losses in 2007 and since then 1B or more in loss every year until 2017. Sprint going bankrupt means people will loss jobs and sprint going bankrupt will mean prices going up anyways. The only way for sprint to survive is to merge, not go bankrupt.
DeleteEven if Sprint ends up in bankruptcy, it does not mean it can not survive. With protection from creditors, it can reorganize and continue to be a competitive force. A merger is the worst outcome for the consumer and Sprint's workers.
Delete"A merger is the worst outcome for the consumer and Sprint's workers."
DeleteIf Sprint's workers can only keep their jobs due to unwarranted government intervention and control of private enterprise, then this is purely unsustainable. And those aren't really jobs, and the "workers" are just getting welfare.
and lots of mvno's will shut down, the ones that give good prices
ReplyDelete......and lots of worthless handsets when Sprint cdma goes away.
DeleteIf it were a possibility I would much rather see US Cellular merge with Sprint.
"......and lots of worthless handsets when Sprint cdma goes away"
DeleteBring stuck on Sprint CDMA, they already ARE worthless.
Sprint CDMA actaully being quite versatile between Sprint MVNOs.
DeleteNo need for new SIMs every time yo want to transfer service or port a number.
Verizon CDMA is much more draconian and other than swapping SIMs between devices so is GSM!
But you're still on Sprint! At least with draconian Verizon, you can use your phone just about everywhere.
DeleteShould I get Sprint now and be grandfathered in on a better price than T-Mobile?
ReplyDeleteThe new company definitely works harder to
ReplyDelete(1) enhance the value of investors,
(2) creatively market teething problems of integrating GSM and CDMA technologies
(3) starts to discover ways to squeeze you and me to cover costs of 1 and 2.
The outcome of this, regardless of if it goes through or not, will be no good. The only possibility that would positively effect the consumer would be if Charlie and Dish got a hold of Sprint, but their board already crapped on him. Dish seems to understand pricing much better in their industry. Comcast and Charter are just bad for consumers and I personally would not want to see them holding more spectrum.
ReplyDeleteI agree with you on Charter Speculum, CorpJP. I am not so keen on Dish because their product melts away in the rain.
DeleteThe whole model rusty-birdbath on the roof that becomes useless once there is a puff of precipitation has always seemed crazy. Or it might look good on paper to some, until the clouds pile up in the sky and the picture goes away.
Enter your comment...Moodys did the teport. The SAME Moodys that inflated the ratings of tons of practically bankrupt financial institutions whichbled to and complicated the stock market and real estate crash of 2008. I trust them as much as I trust Sprint's coverage to be reliable...
ReplyDeleteSprint appears to be the last cellular carrier ergo assigns everyone public IPv4 addresses, instead of NAT. Not a big deal on phones, but can be am issue with hotspots. So that's going away if Sprint is sold and gutted.
ReplyDeleteSprint actually had ARPU in line with the other 3 so their network should be profitable, if they weren't making so many stupid management decisions. They've cut back on their network maintenance further than any other carrier, seemingly giving up on being competitive, making themselves look worse for moo good reason, and just sitting back and waiting for a merger. That should NOT be encouraged. With all their holdings, tmo should never have passed them, they've just been incredibly lazy and incompetent as a matter of policy, now. SoftBank doesn't want to run Sprint, and they can't find any sellers offering a decent price EXCEPT for the other 3 who will pay extra to kill off a competitor, and don't give a damn about the rest of the company assets.
This country needs the infrastructure of four wireless providers. We should not allow this merger to cripple wireless connectivity. Even if Sprint is less than the others, their network is good enough for many Americans who need low cost wireless.
Deletehttps://www.wirelessweek.com/news/2017/06/sprint-makes-t-mobile-wait-it-talks-deals-charter-comcast http://www.phonearena.com/news/T-Mobile-merger-put-on-the-backburner-as-Sprint-enters-exclusive-talks-with-Comcast_id95394
ReplyDeletehttps://www.reuters.com/article/us-sprint-corp-stocks-idUSKBN19I1JW
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