Published reports are a buzz that number three wireless player Sprint will make an acquisition play for number four wireless competitor T-Mobile in just two to three months and is busy trying to get all its ducks aligned to defeat any potential regulatory obstacles.
While neither T-Mobile and Sprint leaders are talking about the possibility, the potential merger of the third- and fourth-place wireless competitors is being talked about by industry watchers, analysts and pundits who are wondering what a merger would mean for the two carriers, the wireless industry, customers and the future of wireless telecom.
The acquisition talk, which some say began two years ago, flamed up last week as T-Mobile enjoyed some of its best earnings news in its history. As Tech Times reported last week T-Mobile added a total of 2.4 million new customers in the recent quarter--the first time in its history it's added more than 2 million net additions.
"A year ago I promised that we would bring change to what I called this arrogant US wireless industry. We are delivering on that promise and our results reflect the growing customer revolution that we've ignited," said John Legere, president and CEO, in a release Thursday.
The news comes amidst a pricing war that continues to wage on and which was, in part, responsible for T-Mobile's big customer gains. The carrier has been stirring up the waters with competitors by eliminating overage charges, offering deep plan discounts and even paying termination fees if customers switch from another competitor.
All that is good news for consumers. Lower rate plans, better prices on smartphones and lower wireless costs overall are exactly what buyers want. Competition, as the saying goes, can be a very good thing.
So what if the two merge? Will it then be a joint effort to force the top industry players, Verizon and AT&T, to keep dropping plan prices and smartphone costs?
One analyst claims that's the scenario.
"An acquisition of T-Mobile would increase Sprint's ability to compete in the U.S. by expanding scale and reducing costs," said Tomoaki Kawasaki, an analyst with Iwai Cosmo Holdings.
Reports at the end of last week claimed Sprint's top shareholder, SoftBank, which along with Deutsche Telekom AG owns the majority of the carrier, was in talks with banks on potential loan availability. That's a critical issue given news reports claim T-Mobile is carrying $8.7 billion in net debt.
Yet industry watchers say it's still a ripe time to move on the deal.
"Were there ever a moment to make a big long-term argument about the changing nature of the U.S. telecom landscape, it is now," Sanford C. Bernstein & Co. analyst Robin Bienenstock wrote in a note Thursday.
