T-Mobile and Sprint’s merger deal is finally official after years of speculation that the two companies would be coming together to form one larger carrier and take on the two largest telecom giants in the country – AT&T and Verizon. This most recent possibility of a merger began last year with talks that T-Mobile wanted to buy Sprint, only to have Sprint eventually leave the discussion. When T-Mobile then revised its offer, Sprint reportedly rejected it due to differences in what both believed the deal was worth, officially stating that neither could come to “mutually agreeable terms,” and thus ending the discussion of a merger between the two companies. Fast-forward to earlier this month and a new rumor began that T-Mobile and Sprint were once again in merger talks, and that an announcement would be made as early as Sunday, April 29. Now that both wireless carriers have officially made a statement about their plans, along with some bold claims about the two together being the only carrier capable of deploying a true nationwide 5G network in a timely manner, this merger could affect the industry in a significant manner and set a precedent for wireless tie-ups going forward.
One point worth noting is that the T-Mobile/Sprint merger is not happening yet. While the agreement may be official, the actual merger is not, as it has yet to receive an approval from several regulators, including the FCC, and that’s a big hurdle to jump over considering that the FCC has not taken kindly to these types of horizontal mergers in the space. AT&T is currently trying to get an approval for its Time Warner deal and hasn’t exactly been traversing the simplest of paths so far. This is evident by the lawsuit that the DOJ brought against the carrier last year. This particular deal would certainly help AT&T but it has been reported that the deal would cost consumers an annual amount of around $571 Million, so the DOJ hasn’t been entirely receptive to the proposition without some major concessions being agreed. It also had quite a few concerns about AT&T’s intention to acquire T-Mobile back in 2011, having effectively prevented that deal from happening in the end. That being said, there’s no guarantee that Washington won’t see T-Mobile and Sprint’s merger in the same light, but should the deal gain approval, it would have to set a new level of standard for these kinds of mergers between companies in the same industry, and could shift the tides of potential decisions for other similar proposed mergers.
Thus far any attempts at a merger of this kind between wireless carriers has either been blocked or fell through for any number of reasons, all the while facing concerns from relevant U.S. governing bodies. A merger of this scale between the two smallest carriers out of the big four would be a monumental acquisition as it would mean that the “New T-Mobile” would be able to compete much better with AT&T and Verizon. Combined, T-Mobile and Sprint would have almost as many subscribers as AT&T. The merger would also mean that T-Mobile would gain all of Sprint’s 2.5 GHz spectrum which was to reportedly be the backbone of Sprint’s plan to launch its 5G network across the country, which would put T-Mobile closer to deploying such a network itself when combined with its own 600MHz holdings.
But what about antitrust concerns? There’s no guarantee that the FCC, the DOJ, or anyone else won’t see this merger as an antitrust issue and more of a negative than a positive for consumers; after all, more carriers means more competition and more competition is supposed to always be better for consumers as it translates to more choice and lower prices. On the other hand, if the merger is approved, that would mean T-Mobile would have an increased ability to compete against the larger carriers. It could lead to lower prices on wireless plans, and with increased coverage due to the spectrum it would gain from Sprint, it might be able to sway subscribers over to its network. AT&T and Verizon might be forced to lower their own prices to compete and keep their subscribers. Lower prices would lead to consumers spending less on monthly wireless bills, and consumers would be able to make decisions on which carrier to go with based on something other than price of their monthly plan. Such a merger being approved would mean that U.S. regulatory bodies would have come quite a long way in the realm of what it considers to be healthy competition, but it would also likely mean that the same regulatory bodies would have to just as equally consider other similar mergers which they haven’t typically been very receptive to.
Possible antitrust issues aside, there’s no doubting that both T-Mobile and Sprint have presented themselves as being a better value for the consumer than the bigger competition, all while making claims that their coverage is just as good. Both have also offered aggressive promotions in hopes of continuing to siphon customers off of the big two carriers, as well as each other. According to Gartner Principal Research Analyst Bill Menezes, it “doesn’t seem likely” that either T-Mobile or Sprint would change their position on being value leaders for consumers. Legere himself boasted in the official merger announcement that wireless prices would decrease as a result of the tie-up, so the goal at the very least is to reduce customers’ monthly bills. T-Mobile has already established itself as a company capable of directing major change in the wireless industry with its long-standing Un-carrier movement, and there’s no reason to think that it couldn’t continue to attempt to drive down prices and once again force its rivals to follow suit.