NEW YORK — A $26 billion merger between T-Mobile and Sprint would unite the cell-phone carriers that have battled for customers by…
NEW YORK — A $26 billion merger between T-Mobile and Sprint would unite the cell-phone carriers that have battled for customers by abandoning long-reviled payment plans and adding a relentless stream of perks.
The question for the government regulators who must bless the deal, and 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 it helped 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 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. The new company would have more than 90 million retail wireless phone customers and a market share of about 30%, according to research firm Recon Analytics.
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,” Legere said in a joint phone interview with his Sprint counterpart Marcelo Claure.
Legere also believes 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 cell-phone plan, but whether a carrier can also offer television and broadband, as well.
The blistering fast wireless 5G networks that are on the horizon is another key driver. The U. S. they contend, must play catch-up to China and South Korea, and the new company is better positioned to lead the U. S. into the new era, they say.
„The best way to describe 5G is what color TV did to black and white TV,” Claure says.
That’s precisely the kind of thing business leaders have to say to convince the Trump Administration regulators who could derail the deal. The U. S. government is trying to block AT&T’s $85 billion Time Warner merger over anti-trust concerns, even though the two companies are in different businesses.
At the same time, the president has trumpeted corporate announcements on job growth plans, including from Sprint parent SoftBank. The Trump Administration has also fretted that China will win the global race for 5G.
With an ear to these concerns, the two companies — whose attempt four years ago to unite was thwarted by the Obama Administration — were blunt about their marketing pitch. A website for the deal was named „All for 5G“ and the two executives insisted jobs will not be lost but created. The two companies together employ about 80,000.
“Jobs in the new company will be greater on Day One, than jobs in the two standalone companies,” Legere says.
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: Post-merger, T-Mobile and Sprint plan to keep their respective headquarters in Seattle and Overland Park, KS.
While the merged company will be known as T-Mobile (with Legere as CEO and Claure on the board), no decision yet has been made on the continuation of the Sprint brand, or other brands under the combined company portfolio: MetroPCS, Boost and Virgin.
Meantime, while the companies are hoping for regulatory approval in the first half of 2019, if not sooner, it will be business as usual for Sprint and T-Mobile customers.
Asked whether that means CEOs Legere and Claure, who have swapped nasty missives at each on Twitter, would now be nice to one another on social media, Claure quipped, “absolutely not.”
Legere responded by saying he did not quite hear the question, „because Marcelo and I were hugging.”
Email: ebaig@usatoday.com; Follow USA TODAY Personal Tech Columnist@edbaig on Twitter
