HarrisX says consumers would support the merger of T-Mobile US and Sprint if it does three things. If it results in lower pricing. If it boosts wireless coverage in underserved and rural areas. And if it results in economic growth. Let’s take a closer look at these three areas and see what we can expect.
Regarding wireless pricing. Unfortunately, based on other mergers, what I see is higher prices, not lower. Now this merger could be different. However, based on what we have seen in the past, I think prices will rise. They will stay lower than Verizon Wireless and AT&T Mobility, but they will likely be higher than today.
Wireless price will likely rise with T-Mobile, Sprint merger
The reason is simple. Today, both T-Mobile and Sprint need to capture the imagination of the marketplace. They need something to win market share. If they had the biggest or best network, they wouldn’t have to focus on price. However, to win market share they must give the customer something else. So, they focus on price.
The reason prices are as low as they are today is simple. T-Mobile and Sprint are competing with each other. If they are no longer competing with each other, there will be no need for current, ultra-low pricing levels. And since every public company needs to be profitable to reward their shareholders or owners, prices will likely rise in order to do just that.
T-Mobile, Sprint wireless coverage will improve further, faster with merger
Wireless coverage will get better when these two networks come together. Hopefully many soft spots in the networks will also be strengthened by combining. They will also have more capitol to invest in their network and improve quality and reach.
The next question is, how much better will it be for customers? How noticeable the improvement will be? That’s not something we will know before the merger is approved. So, regulators will have to get the companies to make commitments before approval.
How will economic growth be impacted with T-Mobile, Sprint merger?
According to this study, economic growth is the third area customers need to see before they will approve the merger. I see this merger helping both T-Mobile and Sprint competitively. This will help them invest more strategically. This will help them be a stronger competitor. All that is good for both companies, their workers and their investors.
What about the general marketplace? I see it having less of an impact on other competitors or the entire industry in general. I see a stronger T-Mobile being a bigger threat, but only on the wireless slice of the pie.
Both Verizon and AT&T are heading in so many different directions for growth, that just a stronger number three and four wireless competitor simply won’t really move the needle in a hot and competitive industry.
Bottom line with proposed T-Mobile and Sprint merger
So, bottom line is this. The T-Mobile and Sprint merger will be good for these two companies. It will help them with their economies of scale. It will make them larger and stronger. This will reward the two companies, their investors and their workers.
I don’t see this really causing a wave of change in the existing wireless industry. Things will stay pretty much the way they are today.
I see prices rising, but still staying lower than Verizon Wireless and AT&T Mobility. Just not as low as they are today.
Perhaps this new company will move beyond wireless, but so far, we have seen no sign of that except T-Mobile talk about getting into pay TV. This is an interesting opportunity for T-Mobile with or without a merger.
T-Mobile, Sprint merger is a mixed bag
As you can see, this merger will be a mixed bag of results. Generally speaking, I like the idea of T-Mobile and Sprint merging from their perspective. However, we should move forward with our eyes open, so we are not surprised later.
There will be a mixture of good and bad, positive and negative with this merger, just like with any other merger. So, if regulators approve this merger, they should be aware of every angle beforehand.
Both CEO’s John Legere and Marcelo Claure talk about the acceleration of 5G with their merger. I don’t see the world of 5G being impacted, except it will help these companies move into this new world faster and easier. At this point, I just don’t see them having an impact on the evolution of 5G on an industry wide basis.
I think this merger has less to do with impacting the next 5G industry, and more to do with just strengthening the number three and four competitors. I think these companies should focus on talking about the real benefits of the merger and not confuse the marketplace with talk of 5G and other things.
With that said, there is no reason to block this merger. It would be good for these two players. So, if that’s what regulators want to do, then I don’t see any real reason to block it. I just think regulators should understand all the pros and cons beforehand and write the rules for this merger accordingly.
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