T-Mobile Doesn't Seem to Think a Sprint Acquisition is Likely

Though T-Mobile US would prefer to sell itself to Sprint or another buyer, to exit the U.S. market, that might not be possible because of high regulator opposition, T-Mobile executives now argue.

That doesn’t mean a sale is seen as impossible over the long term. Indeed, T-Mobile US might well believe that, long term, consolidation is inevitable. But, as with many situations in life or business, the answer to a question is not limited to “yes or no,” but also sometimes is “yes, but not right now.”

Both T-Mobile US and Sprint executives are likely to say, if merger speculation ends, that their firms can compete against Verizon Wireless and AT&T Mobility. What else would you expect executives of public companies to say?

But should merger talks end, the level of competition in the U.S. mobile market is likely to increase. Many observers had expected that a successful Sprint acquisition of T-Mobile US would have reduced the incentives the combined firm would have had to engage in ferocious price competition.

If no immediate prospects for a merger exist, then Sprint is going to have to step up its assault, under conditions where T-Mobile US already has moved first. Logic suggests Sprint will have to try and top T-Mobile US offers, and also cause a greater reaction from AT&T and Verizon.

All of that promotional activity is going to lead to lower profit margins and possibly even less gross revenue, marketwide.

If Sprint and T-Mobile US remain stand-alone firms, there also is going to be heightened pressure for spectrum set-asides or other measures to funnel former broadcast TV spectrum to Sprint and T-Mobile US, on the theory that such new lower-frequency spectrum will allow both to better compete with AT&T Mobility and Verizon Wireless in the coverage area.

Both AT&T Mobility and Verizon Wireless own more lower-frequency spectrum that traditionally is valued because of better signal propagation than higher-frequency signals.

Some would argue that there is a downside to such spectrum set-asides , preventing better-capitalized firms from deploying new spectrum more efficiently. Ultimately, that would work against consumer welfare.

But many believe such policies could well emerge in auctions of former analog TV spectrum, should T-Mobile US and Sprint remain independent entities.
Post a Comment

Popular posts from this blog

Voice Usage and Texting Trends Headed in Opposite Directions

What to Do About Industry Challenges? "Take the Package," One Exec Quips

Verizon has a Brand Promise Problem