Sprint More Hopeful of Merger With T-Mobile, AT&T Shakes Head
Things are really heating up in the U.S. wireless industry as a Sprint and T-Mobile merger begins looking more likely, causing some mobile giants to go on the defensive.
SoftBank chief executive and Sprint chairman Masayoshi Son has been pushing for a merger between the No. 3 and No. 4 carriers for months now, and his latest comments indicate he is becoming more hopeful that regulators will allow the deal to pass. Son made his remarks during an interview to reporters Tuesday alongside former U.S. Secretary of State Colin Powell to reporters.
"We can make it more effective by getting bigger scale," Son said. "Us becoming a more credible competitor in scale is something good for American consumers and citizens."
Son's attitude reflects one that he has been touting for months: that unless Sprint and T-Mobile have more scale and deeper pockets, they cannot realistically compete with the juggernauts of AT&T and Verizon. For an idea of the inequality, consider that even with a combined customer base, Sprint and T-Mobile have fewer subscribers than AT&T alone.
"I brought the network war and price war [to Japan]. I'd like to bring that to the States," Son said to industry officials in March. "I would like to provide an alternative to the oligopolistic situation that two-thirds of American households can only get access to one or two providers. I'd like to be a third alternative with 10 times the speed and lower price."
The main opposition so far has been the U.S. government. Both the FCC and Department of Justice's antitrust division have said they are wary of allowing further market consolidation in a sector with only four major national competitors. Recent months, however, have seen giants such as Comcast and Time Warner join forces, as well as AT&T and DirecTV, setting the stage for a telecommunications industry with larger scale and more outreach. If anything, Sprint and T-Mobile merger advocates are hoping this will ease regulators' minds. Approval from both the FCC and the antitrust division is needed for the deal to happen.
If the merger does go through, early but unconfirmed reports indicate Sprint will pay around $40 a share for T-Mobile, resulting in a $32 billion purchase. Sprint would also reportedly lose its name and be absorbed by the T-Mobile brand. Current T-Mobile CEO John Legere is expected to head the entire company.
Still, despite optimism in the Sprint camp, AT&T, which failed in its $39 billion bid for T-Mobile three years ago, doesn't think anything is going to happen.
"The problem as I see it is the way the government shut our deal down. They wrote a complaint and a very specific complaint. You're consolidating the industry from four to three national competitors," AT&T chief executive Randall Stephenson said Tuesday during an event at the Economic Club of Washington, D.C.
Oh, and there's the fact that T-Mobile is carefully hedging itself so that in case there is no merger, they aren't left with nothing for entertaining such a thought. But more on that later this week...
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