Wireless world again is shaken up
T-Mobile-Sprint union could usher in a new era
A $26 billion merger between T-Mobile and Sprint would unite the cellphone carriers who have battled for customers with more flexible contracts and perks.
The question for the government regulators who must bless the deal, and for all of us: Are the good times over?
Under its branded “Uncarrier” corporate persona, T-Mobile has been a disrupter in wireless, the first carrier to do away with onerous contracts, pay off early-termination fees for customers willing to switch to its service and helping stoke the spread of “unlimited” data pricing plans.
As a competitor, Sprint has been right on its heels — and eventually, No. 1 Verizon and second-place AT&T followed with many of the hallmark features.
Critics of the deal, announced Sunday, are concerned that a post-merger environment could temper if not eliminate such practices altogether, especially as four major U.S. wireless carriers are whittled down to three.
T-Mobile CEO John Legere dismisses that notion. “What Sprint has done, what T-Mobile has done to drive competition — we plan on supercharging it,” he said in a joint telephone interview with his Sprint counterpart, Marcelo Claure.
Legere says the notion that competition will lessen with the drop from four wireless competitors to three is “archaic” thinking, given that companies such as Comcast are moving into the space and have added more customers than AT&T and Verizon combined. In other words, the fight for customers isn’t just for the most enticing cellphone plan but whether a carrier can also offer TV and broadband.
The blistering-fast wireless 5G networks that are on the horizon are another key driver. The United States, they contend, must play catch-up in this early going to China and South Korea. The new company is better positioned to lead the nation into the new era, they say.
T-Mobile plans to spend $40 billion on infrastructure and expand its customer care model.
But there is wide skepticism. “I would expect significant job losses, especially on the Sprint side, as this is a major source of the synergies between the two companies,” says Roger Entner, an analyst with Recon Analytics.
One promising sign for jobs: After the merger, T-Mobile and Sprint plan to keep their respective headquarters in Seattle and Overland Park, Kan.
While the merged company would be known as T-Mobile (with Legere as CEO and Claure on the board), no decision has been made on continuing the Sprint brand or other brands under the combined company portfolio: MetroPCS, Boost and Virgin.