Developing: T-Mobile and Sprint have Announced Plans to Merge

Developing news:

T-Mobile (owned by Germany’s Deutsche Telekom) and Sprint (majority stake by Japanese owner SoftBank) have announced a roughly 26 billion merger agreement today, and they “hope to close the deal by the first half of 2019.”

T-Mobile and Sprint have flirted with discussions of mergers before.  There was always the uncertainty of whether a merger would get past antitrust reviews and other regulatory hurdles.

This merger is touted as a way to combine the subscriber base for T-Mobile/Sprint to compete against the #1 and #2 carriers (Verizon and AT&T, respectively).   The merger would give them the resources and scale to roll out “the next generation of ultra-fast wireless technology, called 5G.”  Some sources have indicated that “T-Mobile will not be liable to pay Sprint a breakup fee should regulators block the deal”

Initial Thoughts

I can’t say I’m too surprised by this development.  There had been reports of active discussions over the last week.

I have mixed feelings about this development. I have written extensively about my experience with T-Mobile and Sprint, as they’ve both been my wireless providers for the greater part of a decade.

On the one hand, I like both Sprint and T-Mobile.  I doubt that there would be significant impact on the “existing customer”; I suspect most plans would be grandfathered in. A combined company might very well allow them to scale their resources better.

Long term, a merger that would combine #3 and #4 of the largest telecom companies doesn’t bode well for consumers.   I’ve always been a big proponent of healthy consumer competition, since competition drives innovation.  Over the last couple of years, we’ve seen some great innovation coming out of T-Mobile with their “Un-Carrier” moves.  Those moves disrupted the market and offered more options for consumers.

I shouldn’t penalize T-Mobile for it.  However, since T-Mobile was also so good at what it did, in some ways, I selfishly don’t want the merger to go through.

I guess we will have to see if the deal will really go through this time.

Are you concerned about this merger development?

 

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