Sprint CEO Says Merger With T-Mobile Beneficial to Customers
A merger between Sprint and T-Mobile would benefit customers, Sprint Chief Executive Officer Dan Hesse recently said in an interview with CNET, by providing a stronger third competitor that can provide different coverage options from what AT&T and Verizon offer.
The CEO points to the fact that Sprint is financially incapable of providing coverage to those who need it in suburban and rural areas.
"If you have more customers, you can afford to build a larger network," Hesse told CNET. "Only then do you have the revenue to justify building in smaller suburbs and rural areas.
"If you live in an urban core, you will have access to AT&T and Verizon and you'll also likely have access to T-Mobile and Sprint. But when you go to less populated areas, Sprint and T-Mobile might not be there."
Verizon is the largest carrier in the United States, with 122 million customers. AT&T follows with 116 million, while Sprint has 54 million and T-Mobile 49 million. Even with a combined customer base, Sprint and T-Mobile would still be smaller than Verizon or AT&T.
The remarks echo the sentiments of Sprint parent company SoftBank chief executive Masayoshi Son, who has been spearheading the campaign for a merger with T-Mobile.
"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."
"We can make it more effective by getting bigger scale," Son told reporters last week. "Us becoming a more credible competitor in scale is something good for American consumers and citizens."
If the two companies do get a deal through, the new leader likely won't be Hesse. Instead, most reports indicate that T-Mobile's eccentric, combative CEO John Legere will head up the new company. Also, Sprint will likely be absorbed into the T-Mobile brand, which has become a fast-growing maverick in the wireless industry.
Still, the merger faces stiff opposition from the U.S. government. The Federal Communications Commission (FCC) and the Department of Justice (DOJ) antitrust division must approve it, and both agencies have expressed concerns. The FCC and DOJ have said that further U.S. wireless industry consolidation reduces customer options -- an argument with which Hesse and Son strongly disagree.
The possibility of Sprint and T-Mobile reaching an estimated $40 billion deal comes at a time when two other major acquisitions -- Comcast-Time Warner and AT&T-DirecTV -- also are testing federal officials.
"My view is if they are willing to approve these other two deals, it would be more difficult to not approve a merger in wireless," he said.
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