If Sprint & T-Mobile merge, will prices be slashed?

June 12, 2014

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According to some analysts, Sprint will be able to save up to $6.6 billion on a variety of costs if they are able to merge with T-Mobile. In order to achieve those savings, Sprint will also need to slash prices with deep discounts and most likely a decline in immediate revenue.

Although Sprint Chairman Masayoshi Son has promised a price war on several occasions, analysts are under the belief that he is hesitant to cut fees due to the decline in revenue that would occur.

“I think he’s realized he’s between a rock and a hard place. Sprint‚Äôs prices are much too high, but if Sprint cuts prices, its stock will fall,” said Craig Moffett, lead analyst at MoffettNathanson. “They don’t come close to justifying their stock price.” - Reuters

According to Reuters, Sprint has agreed to pay about $40 per share to buy T-Mobile. A Sprint/T-Mobile merger would have more than 100 million subscribers which is just behind both Verizon and AT&T.

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A Sprint/T-Mobile company will own 29 percent of the wireless market share in this country and will therefore create a viable third player. But what  incentive would this third-place wireless company have to be truly disruptive and cut prices?

Even under new ownership, Sprint has not done anything to show¬†that a merger with T-Mobile would help anyone other than executives who help close the deal. Both networks are generally considered the third and fourth best in the country (with T-Mobile’s improving, no doubt).

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T-Mobile itself has driven Verizon and AT&T to offer¬†cheaper plans to some of their customers. Anyone who has seen AT&T and Verizon’s prices sky-rocket the last decade should understand how unbelievable that is in today’s world.

Lawyer and telecom consumer advocate Susan Crawford also issued a warning to regulators about letting the two companies merge.

Whatever “synergies” — such as eliminating duplication — Sprint and T-Mobile might capture by combining wouldn’t necessarily be passed on to consumers in the form of lower prices. And those savings are likely outweighed by the harm to competition such a merger would cause. - Bloomberg

Comments

  • Luka Mlinar

    LoL of course not. Prices in the US are fixed among company’s. They have been robing you guys blind for years and they will continue to do so. It’s just how life is :/

  • Aar0nC

    Sprint is a sinking ship and the captain has no idea what he’s doing… it will be sad if T-mobile sinks along with them after the purchase, they were doing so well with all these promotion.

  • Oli72

    Pls no merger. T-mo don’t need Sprint.

    • Corbin Crutch

      Seriously though…

    • Don

      I can’t blame you buddy. If I was a T-Mobile customer I would want no part of this. Unless T-Mobile management runs the show, Sprint could sink TM with their horrible investment decisions. Clearwire bust! Spark?? Lets start on spark when we havent made our 4G available or reliable!! Clowns

  • frhow

    Welp, Ill continue with my straighttalk ATT service. 45/month of unlimited talk text and 3gb of 4g LTE on ATT network. You cant beat it. I normally pull down 35mbps 16mbps upstream.

    • Quicksand Jesus

      Wow, 35mbps but you can only use 3gb a month? so in about 15 mins you would use your data for the whole month????

      • TMOTECH

        I don’t think it works that way.

        • Quicksand Jesus

          Actually that’s exactly how it works. Its fairly simple math.
          3gb at 35 MB/sec comes out to 14.62 minutes to download. So that sounds like a pretty terrible plan.

  • PaulACalvin

    According to Reuters, Sprint has agreed to pay about $40 per share to buy T-Mobile. A Sprint/T-Mobile merger would have more than 100 million subscribers which is just behind both Verizon and AT&T. http://0rz.tw/9BIIY

  • Arturo Raygoza

    T-Mobile merging with sprint will downgrade tmobiles network

  • Amadeus Klein

    A Bit Late, But Dare I say it…..

    A Sprint T-Mobile Merger “could” work…. IF, and honestly, only if they follow T-mobile’s lead in pricing and let the T-mobile strategic team lead the way…. Phase out the Sprint CDMA network, “Uncarrier” up Sprint (Pricing and Customer Service), and spend BIG on infrastructure improvements with a very fast timeline….

  • Don

    I am currently a Sprint customer and waiting for my contract to expire then I am out. Tired of Sprint’s one blunder after another, charging premium prices for services they can’t deliver! T-Mobile’s 4G network could be their only saving grace and possible reconsideration on my part. If not, I will change to Verizon because I live in DC and Verizon owns this town with great 4G everywhere!