Speculation around a merger between Sprint Corp and Deutsche Telekom subsidiary T-Mobile US has heightened after Masayoshi Son, the CEO of Sprint’s parent Softbank, confirmed he wants to merge the wireless operators. A consolidation play would take the…
Speculation around a merger between Sprint Corp and Deutsche Telekom subsidiary T-Mobile US has heightened after Masayoshi Son, the CEO of Sprint’s parent Softbank, confirmed he wants to merge the wireless operators.
A consolidation play would take the number of US-wide network operators down from four to three, and reports have suggested that the US Department of Justice (DOJ) and Federal Communications Commission (FCC) are unconvinced of the benefits of a deal.
In a US TV interview broadcast on PBS, Son argued that AT&T’s and Verizon Wireless’ market positions constituted a duopoly and that Sprint and T-Mobile had to merge to gain scale so they could compete.
Son said that if the merger happened, he would engage AT&T and Verizon in a “massive price war” and said that he wanted to be the number one operator in the US market.
In a separate interview with CNBC, Son was scathing about the speed of internet in the US and promised that he would develop a world-class network. He added that in Japan, Softbank was testing wireless technology on the streets of Tokyo that delivered smartphone users speeds of 700Mbps.
When asked about what attitude the DOJ and FCC might take to a deal he said he did not know, and that he was just throwing a stone into the pond. He added that it was up to the American people to decide on whether a deal should be allowed.
Three years ago the DOJ effectively blocked a takeover of T-Mobile by AT&T, and since then T-Mobile has developed into a successful challenger brand, offering innovative price plans and taking subscribers off its larger rivals. AT&T had to pay out a massive US$4bn break-up fee to T-Mobile when the deal fell through.
Other reports have suggested that Son will argue that a merged Sprint/T-Mobile would be able to compete in home broadband, challenging the likes of Comcast and Time Warner Cable.
In the US it is common for consumers to have only one or two operators offering Internet access, and Son is said to believe that by offering competition in this sector, he may be able to overcome issues in the mobile market.
Meanwhile, speaking at a conference yesterday T-Mobile US’ CFO Braxton Carter has reiterated his belief that consolidation in US wireless is a matter of if, not when. He added that a third national operator with scale could be beneficial for competition.
If the government wanted to retain four players, they should be preventing AT&T and Verizon from buying up more spectrum, he argued.
