Sprint and T-Mobile Merger Still The Best Option Against Verizon and AT&T, Says SoftBank President
Sprint is facing some stiff opposition to a proposed takeover of fellow wireless carrier T-Mobile, but Masayoshi Son, the president of Japan-based SoftBank Corp., reiterated the company's desire to follow through with the deal during a quarterly earnings report Tuesday.
SoftBank Corp. owns Sprint, which is based out of Kansas City. Sprint is currently third-largest wireless operator in the United States, followed by T-Mobile. A merger between the two wireless carriers would still result in a combined customer base smaller than that of the second-largest network, AT&T. Verizon stands in as the nation's largest carrier.
"Without industry consolidation, for Sprint alone to become No. 1 in the U.S. is literally just a dream," Son said Tuesday. "I'm not content for Sprint to remain No. 3 because if we could grow bigger, we will offer aggressive discounts and services, just like we did in Japan."
"There is a huge gap between the bigger two and the smaller two, thus the level of competition isn't sound or strong."
Eccentric T-Mobile CEO and President, John Legere, expressed similar sentiments in a recent interview on the television show Bloomberg West.
"If the government wants us to have a competitive environment, you are going to make sure that the duopoly doesn't use their prowess to crush the little guys and have this sub-1 GHz spectrum be moved all to them," Legere said.
"We're all going to need better scale and capability. The question starts to be: How do you take the maverick and supercharge it? We either need more spectrum and capability, a lot more investment, or we need consolidation."
The argument that in order to break up the perceived duopoly of Verizon and AT&T, however, isn't convincing enough for the U.S. Department of Justice's antitrust division. Federal Communications Commission chairman Tom Wheeler also expressed distrust in further consolidation during a January meeting with Sprint executives. Changing the marketplace from four carriers to three, he said, could lead to higher costs for consumers. Approval from both agencies is required for the merger to go through.
This isn't the first time that a fellow top-four carrier has tried to takeover T-Mobile. AT&T tried back in 2011, although antitrust officials ultimately struck down the deal.
Even Sprint chimed in against the deal in 2011.
"Removing T-Mobile from the market would substantially reduce the likelihood of market disruption by a maverick. T-Mobile, as one of only four national carries, provides a critical constraint on AT&T's consumer retail prices," Sprint said in a statement.
U.S. government officials seem to agree, calling T-Mobile a "self-described 'challenger brand,' that historically has been a value provider."
Recent reports indicate that Sprint is reassessing its strategy given the greater-than-expected public opposition against it. On the bright side, Sprint is said to be close to obtaining the necessary financing if government agencies give the company the go-ahead.
What do you think about further market consolidation in the U.S. wireless market? Let us know if you believe this will ultimately lead to higher costs or greater savings in the comments section below.