The big four U.S. Carriers could be going down to just three sometime in the future, at least if a new report from the Wall Street Journal proves accurate. Reportedly Sprint is currently considering making an offer to buyout T-Mobile. Right now Sprint is said to be studying regulatory concerns but could end making a move sometime in the first half of 2014.
If Sprint does decide to offer a bid, the deal could end up being worth more than $20 billion, depending on the size of the stake that Sprint is trying to acquire. Keep in mind that $20 billion is considerably less than the $39 billion that AT&T offered T-Mobile before their deal fell through.
As you might have already guessed, Softbank (who recently acquired Sprint) is said to be the driving force behind this potential buyout plan. Softbank wants to further increase its control over the US wireless market, and adding T-Mobile to the mix would certainly be one way to kick things up a notch.
Combining Sprint and T-Mobile’s customer base would create a force that is more than 90 million strong. While their customer base would still be a bit smaller than AT&T and Verizon, it would certainly even up the playing field a bit more.
So would such a merger make sense? For Sprint, absolutely. Combining Sprint and T-Mobile’s customer base would create a force that is more than 90 million strong. While their customer base would still be a bit smaller than AT&T and Verizon, it would certainly even up the playing field a bit more.
You might be wondering why T-Mobile would ever consider such a deal. With their uncarrier efforts going well, they might not want to consider such an offer. That said, T-Mobile’s parent company Deutsche Telecom is still said to be interested in exiting the U.S. Market and even T-Mobile’s CEO John Legere has previously said the company is potentially open to such deals.
Of course even if T-Mobile and Sprint both end up interested in making a deal, they’ll still be facing an uphill battle when it comes to dealing with the FCC and DoJ. As you probably remember, the AT&T/T-Mobile deal fell apart because of regulatory issues. For one thing, the US government didn’t seem to want there to be just three major carriers.
On the other hand, AT&T and T-Mobile combined is a much more powerful entity than Sprint and T-Mobile combined. If Sprint could make a proper argument about how AT&T and Verizon’s larger marketshare is hurting the U.S. cellular market or causing stagnation in the wireless business — maybe something could be worked out. Again, it’s hard to say one way or another this early in.
It’s also important to note that Sprint has yet to confirm the validity of this report, though we have reached out for comment. In other words, speculation is advised.
What do you think, could a T-Mobile and Sprint merger make sense if handled right?