If there was any question that T-Mobile was entertaining the idea of a Sprint merger, a recent statement by T-Mobile CFO Braxton Carter hints that it could be all but inevitable. Speaking openly during a telecom conference today, Carter said that in regard to his company’s future prospects for consolidation, it wasn’t a question of “if” but “when.” This echoes a similar statement Carter made last year, after T-Mobile purchased MetroPCS. And while the words “Sprint” never actually left his mouth, investors are now anticipating a Sprint merger is likely. You know, should US regulators give it the green light.
Last week Deutsche Telekom — T-Mobile’s parent company — said it would be open to potential consolidation in the U.S. mobile market, but also mentioned that they were in no hurry to make such deal (they’ve always been open to merger talks in the past). According to them, T-Mobile has performing well enough to continue running by itself. But as Carter points out, “To take a third-scale national player that has the scale benefits with the right business model could be very competitively enhancing in the U.S..” In other words, AT&T and Verizon should probably be watching their backs.
Something tells us they aren’t too worried. It was back in 2011 that the US Department of Justice and the Federal Communications Commission shot down AT&T’s proposed buyout of T-Mobile for a cool $39 billion, leaving AT&T walking away bruised and broken. Sounds they wouldn’t be too receptive of a Sprint/T-Mobile merger either.
Carter goes onto say that the government can’t simply have its cake and eat it too. “If they think there really needs to be four players in this market on a nationwide basis, they are going to have to put some structural protections to ensure an adequate distribution of spectrum.”
Sprint has been gunning for T-Mobile for years now. In 2010, Sprint CEO Dan Hesse went on the record about merger talks with T-Mobile. In 2011, talks of a merger once again began rearing their head, followed by a recent report last December saying Sprint would offer upwards of $20 billion to buy T-Mobile this year, but was still feeling things out. Like that persistent dude in the movie theater, Sprint really wants T-Mobile’s number.
I guess John Legere never received the memo, T-Mobile’s off-the-wall CEO who continued blasting away at rival carriers on Twitter. In a recent tweet, Legere specifically calls out Sprint saying, “Remember when people actually liked @sprint? Yeah, me either.” It’s clear Sprint is going to need more than just Carly in tight leather to drawn in new customers. Upgrading their slow as molasses network would be a good start.
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