by Carl Field, 2 years ago
It seems like many people are pretty upset about AT&T trying to acquire T-Mobile. According to an article from Bloomberg, you can now add Sprint to that list. Sprints CEO Dan Hesse said that Sprint…
The U.S. mobile market is a big one, with 321.7 million subscribers as of second quarter of 2012. That's a 101% mobile penetration, which means the number of lines equals the population. But while the nation is serviced by four major carriers today, T-Mobile thinks the market is not big enough for four big carriers to service.
In a meeting with shareholders, COO Jim Alling said the industry might see some adjustments and consolidations in the next few years. “Is it possible that four major players could go down to three? I think that is possible, and likely in the longer term,” he said, referring to the possibility of the country's four major carriers merging into just three. This actually almost happened when AT&T made a bid to acquire T-Mobile from its parent company Deutsche Telekom in 2011. That $39 billion acqusition deal did not push through, though, having been shot down by regulators for possible anti-competition.
But even as the so-called AT&T-Mo deal was halted, the major U.S. carriers have found themselves entering into mergers and partnerships with other companies. For instance, there's the planned Sprint acquisition by Japanese telecoms provider Softbank. There's also T-Mobile's acquisition of super-regional carrier MetroPCS.
Of course, this will depend on the regulatory environment, Alling, says. As such, whatever consolidation may happen is set for the longer-term. The statements made by T-Mobile's COO probably assume that his company will be on the winning end of the deal, if the industry were to consolidate into a fewer — but bigger — major competitors.
But are four major competitors really too big for a country to handle? In some regions, the mobile industry has seen consolidation into three or fewer carriers. For instance, China has China Mobile, China Unicom and China Telecom, which have almost a billion lines shared across the three. However, another big market, India, has eight major mobile carriers. Which is the best model for the U.S.?
Will the American market benefit from a fewer major competitors? If the big four — AT&T, Verizon, Sprint and T-Mobile — were reduced into three major players, will this result in improved services and reduced prices?