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The Dreaded T-Mobile and Sprint Merger Is Officially Dead

Photo: AP
Photo: AP

The planned merger between T-Mobile and Sprint is not happening after the two telecom giants “were unable to find mutually agreeable terms,” both companies confirmed in a statement on Saturday.


T-Mobile CEO John Legere wrote that he believed the merger would have been beneficial, though somewhat cuttingly added “a deal with anyone will have to result in superior long-term value for T-Mobile’s shareholders compared to our outstanding stand-alone performance and track record.” Sprint CEO and SoftBank board member Marcelo Claure added that he agreed on the merits of the proposed deal, but “We have agreed that it is best to move forward on our own.”

For months, reports circulated that T-Mobile and Sprint were finally nearing a deal to merge operations, something which had been explored in the past but shut down amid fears regulators would reject the deal. Currently, T-Mobile (which is owned by Deutsche Telekom) and Sprint (owned by SoftBank) form the two underdog players in a mobile market currently dominated by Verizon and AT&T—the latter of which T-Mobile had already tried and failed to merge with in 2011 after the Department of Justice and Federal Communications Commission axed the deal. T-Mobile walked away with a $4 billion breakup penalty.


While regulators tend to be more permissive of so-called “vertical” mergers in which large companies purchase smaller ones at a different point in their supply chain, they’re much more skeptical about “horizontal” mergers, when two large companies merge to form a market-dominating behemoth.

In this case, the proposed horizontal merger would likely have reduced choice in the market from four to three large wireless providers. Both Sprint and T-Mobile have survived by offering unlimited data plans that the larger companies had taken away, and T-Mobile in particular moved to limit practices like hidden fees and credit checks. While Sprint is financially struggling and has tens of billions of dollars in debt, its 5G spectrum holdings have positioned it well for the future.

But if T-Mobile and Sprint merged to form one company, they’d have less incentive to offer things AT&T and Verizon don’t. Instead, they could potentially rely on reduced competition and their combined market share to get away with less savory business practices. T-Mobile has already become enough of a player that it’s rolled back some of the perks that it used to lure customers away from the larger carriers.

As Engadget noted, however, with a new presidential administration eager to slash regulatory oversight and brag about its friendly relationship with SoftBank, as well as a FCC willing to bend over backwards to please telecoms, fears regulators might step in are likely not what killed the deal. Instead, it may have simply come down to disputes over which parent company would have a dominant position in ownership ratios. According to the Wall Street Journal, any deal would have likely ceded full control of the merged company to Deutsche Telekom, and SoftBank CEO Masayoshi Son lately had “began to realize that he wasn’t willing to give up control of Sprint.”


Telecoms will likely try to continue to consolidate, but for now it seems there’s a reprieve in the march towards monopoly.

[Engadget/Wall Street Journal]


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The World of Vee

I’m pretty happy with Sprint after being an ATT customer for the last 15 years

the catalyst for change? ATTs diminishing customer support and this deal 

Seriously. How could I pass that up?