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T-Mobile Offers Same Wholesale Rates for Its MVNO Partners

One of the biggest concerns that entities have over the proposed Sprint-T-Mobile merger is that it will raise costs. As a way of appeasing the concerns of its MVNO partners, T-Mobile CEO John Legere has come up with a solution: by indefinitely locking its current wholesale rates. 

Legere stood in a hearing before Congress where he insisted that wholesale prices, along with consumer costs, will drop once the merger is approved. But as a way of gratifying the concerns of its MVNO partners, the CEO offered to sign a deal that would lock in the existing rates of its partners "for as long as they want."

The hearing tackled an issue raised by C Spire CEO Hu Meena in a letter where it referred to Sprint as "the one true maverick in the wholesale market." Meena also warned that the merger would put an end on the downward pressure Sprint has put on pricing. This affected both MVNOs and rural operators. 

In response to this, Sprint chairman Marcelo Claure insisted that without the merger, there is a possibility that they would need to raise prices in order to fund their future investments. Claure shared that they would require spending up to $25 billion in order to extend 5G throughout its existing footprint. The executive also pointed out that the company has currently amassed a debt of $40 billion and that they are not making any money. 

As explained by Claure, "a company that doesn't generate free cash flow doesn't have the ability to invest." One solution pointed out by the executive is that they would need to borrow money from banks and in the process, raise its prices. And even so, only selected areas would be able to use 5G. 

With the merger approved, the combined company will be able to purchase more spectrum. Right now, they are joining a mmWave spectrum auction. They still have plans to get a lot more spectrum once the two companies merge together. 

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