Sprint and T-Mobile Merger Necessary for Lower Prices, Sprint Chairman Says
Sprint chairman and SoftBank Corp. chief executive Masayoshi Son made his case for a merger with fellow wireless carrier T-Mobile in Washington Tuesday, stating that in order for Sprint to shake up the stale wireless industry and offer higher speeds at lower prices, it's going to need to scale up.
Japanese-based SoftBank, which purchased Sprint last year, has been hinting at acquiring T-Mobile in order to better compete against the juggernauts that are Verizon and AT&T. Even after combining their subscriber base, a combined Sprint and T-Mobile company would still have less than AT&T.
"I brought the network war and price war (to Japan). I'd like to bring that to the States," Son said at the U.S. Chamber of Commerce to industry officials.
"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 have the spectrum. We have the technology. But we need scale, efficiency to make an investment for the network," Son told reporters after his speech.
"We are already free cash-flow negative. So we can start a small fight but it does not scale, it does not last, it's not sustainable. We need to have a real fight, a long and deep and heavy fight. And for that, we need scale."
U.S. government antitrust officials and FCC chairman Tom Wheeler have expressed concern about further market consolidation in the wireless industry. Cutting the number of major national carriers from four to three, they argue, could end up leading to higher costs for consumers.
Sprint's Son, however, disagrees. Only with more resources at their disposal can Sprint pursue aggressive strategies against the "duopoly" of Verizon and AT&T.
"Without industry consolidation, for Sprint alone to become No. 1 in the U.S. is literally just a dream. 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," Son said during the recent Sprint quarterly earnings report.
"There is a huge gap between the bigger two and the smaller two, thus the level of competition isn't sound or strong."
Son told Charlie Rose on PBS during a late-Monday night interview that despite governmental opposition, SoftBank and Sprint intend to "give it a shot" when it comes to acquiring T-Mobile.
T-Mobile CFO Braxton Carter recently stated that "it is not a question of if, it is a question of when" when talking about a merger with Sprint. Deutsche Telekom, the owner of T-Mobile, however, has stated that it intends to continue with its plans as if T-Mobile will be operating on its own.
"You can't build your planning on a potential transaction. It's really difficult to judge," Deutsche Telekom CEO Timotheus Hoettges said at an earnings press conference in Bonn, Germany last week.
Son's push for a merger with T-Mobile comes as the executive is extremely unhappy with the way things are currently run at the Kansas-based Sprint offices. He has blamed Sprint's poor performance on a "loser" mentality and even compared Sprint to Japanese feudal lords that held little influence outside their home turf.
"Sprint is a daimyo in Kansas," Son said. "That's not enough."
"We need to change Sprint's culture," Son told The Wall Street Journal after a news conference in February.
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