T-Mobile and Sprint may make concessions to help their merger gain approval

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Following a report last month that claimed that Department of Justice staffers told T-Mobile and Sprint that their merger was unlikely to be approved as it’s structured, a new rumor says that the two carriers are considering making concessions to help their deal’s odds of approval.

T-Mobile and Sprint are said to be weighing a few different concession options. Sources speaking to Bloomberg say that one of the top concessions being considered is a separation and possible sale of their prepaid businesses. Other options being examined include the sale of some spectrum licenses or setting up a fourth carrier through a network-leasing agreement, though T-Mo and Sprint reportedly consider those options less attractive.

The combination of Metro by T-Mobile, Boost Mobile, and Virgin Mobile would give T-Mo around 42 percent of the prepaid market, which would be the biggest piece. The sale of T-Mobile and Sprint’s prepaid operations could help their merger’s chances of approval, as some worry that the deal could harm lower-income consumers by reducing their carrier choices and possibly raising prices.

Peter Adderton, founder of Boost Mobile, floated the idea of prepaid divestitures last year following the announcement of T-Mobile and Sprint’s proposed merger. He said that the deal should only be allowed to happen if Boost and/or Metro are spun off, suggesting that those brands aggressively compete for prepaid customers but that that competition could go away if the merger is approved. “This level of market domination virtually always leads to rising prices, more onerous terms and conditions and lower service quality,” Adderton said of the deal, “and young and credit-challenged prepaid subscribers simply can’t afford that.”

Selling off some prepaid brands seems like the most appealing option for T-Mobile and Sprint of the three mentioned in today’s report. For example, one of the major parts of the deal that T-Mo and Sprint tout is that their combined spectrum portfolio will allow them to build a nationwide 5G network, and so they’re likely hesitant to sell off some of those airwaves.

Source: Bloomberg

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  • Sharti24

    They should be forced to sell the low (and some) mid band spectrum. Tmobile doesn’t need any of sprints 800mhz and doesnt need All of their 1900mhz spectrum. Sell it to US Cellular

    • ugp5

      I think they need to keep all the low band because some areas do not have as much 600MHz. Also need to keep the 800MHz for the Sprint customer phones that use this band for coverage. I believe a portion of the 1900MHz spectrum is the most expendable and should be the only spectrum they consider divesting.

      • Sharti24

        Tmobile owns 600mhz in at least a 10×10 mhz block across the entire US. I believe Sprints 800mhz is only a 5×5 mhz block anyways.

        They dont need 600/700/800mhz lol.

        • riverhorse

          They are planning 16HD(lol) on demand to multiple peripherals TV, unlimited & uncapped home internet…

        • They need it all it provides better coverage plus itll be put into carrier aggregation and 5G.

        • GeoGuy17

          The 800 Sprint has is such a small slice I doubt that will play any role at all. It will be the 1900 or higher frequencies that will likely be looked at and possibly paired back. With the amount of spectrum others have in the higher bands, it may not even be that which is the issue. It may be more of a jobs and who they purchase equipment from that is more of an issue seeing how much Huawei is in the news lately. T-Mobile may need to say they will use X amount of equipment from a vendor with a heavy presence in the US and using a percentage of US sourced materials in tower construction.

        • SirStephenH

          Then sell off band 12, it’s not nationwide like Sprint’s band 26. T-Mobile already owns some band 5 (subset of band 26) in a few areas so it already has bands 12, 26, and 71 (700/800/600MHz).

        • Sharti24

          Sell off 700mhz? All that time and money t mobile spent trying to buy it from Verizon and other small local carriers….Thats easier said than done. Plus all that work that would have to be done to every tower. Im not sure if a simple software update would broadcast 800mhz from the tower anyways. They might need to add new antennas to make it happen

    • Robert Roll

      I’d say any areas where they have more then 20mhz worth of 1900mhz bandwith (LTE Bands 2 and 25, 2 is a subset of 25) should sell the excess off to US Cellular or a regional carrier in those markets if USC dose not want it but any area where they have more then 20mhz of 600 sell off the 850(LTE band 26) and leave Band 41 (2500Mhz) alone and LTE Band 4 and 66 (1700/2100Mhz 4 is subset of 66) alone and sell off Boost and Virgin and keep metro

      • BobbieDooley

        A better idea would be to change the PCS band to unlicensed.

        This way, people can setup their own microcells at their home, business, schools without the need to be dependent on a 3rd party carrier company to maintain it, or require a business to commit to a contract with hundreds of phone lines to justify the expense of installing and maintaining a microcell network beyond a call center call flow that always ends with “turning off the phone, now turn it on.”

        With PCS, Virtually every phone manufactured in the past 10 years supports PCS band, and Block B so it has maximum compatibility.

        In some parts of the world, the microcells also use a technology known as “neutral host” so they aren’t exclusive to a company. Many neutral hosts support WiFi, and that’ll need upgrading in the next few years too. Might as well think about upgrading it to neutral host.

      • CharlesB

        Alternatively, they could spin off boost and virgin into one company and give them some assortment of band divestitures as well. Essentially making a small “4th” carrier that has some holdings it could keep or sell off. Kind of a combination of @disqus_bNk110yO4j:disqus ‘s ideas.

    • Are you crazy???? Tmobile needs every inch of 800mhz some mid band sure but low band definitely not. No no no!

      • Sharti24

        800mhz is only 5×5 mhz. They have plenty of 600mhz. No way i see the gov. allowing them to have 800mhz along with their already 600/700mhz duo

    • SirStephenH

      mm wave is never going to materialize like people claim so mid-band is still going to be the king of coverage and capacity, T-Mobile will need all that it can get.

      A lot of coverage on all carriers is made possible by low-band, something T-Mobile had been lacking for too long. Sprint’s band 26 is nationwide unlike T-Mobile’s band 12 so I see band 12 as a better choice for sell-off, especially considering that Sprint’s band 26 and T-Mobile’s band 12 are both 5+5MHz. Coverage area for band 26 will be a little smaller than band 12’s but it’s speeds will be a little better, band 71 is to be T-Mobile’s low-band coverage backbone anyways.

      I think we can all agree that T-Mobile would never sell-off band 41 because it’s central to T-Mobile’s 5G plans.

  • Spin off Boost and Virgin. 9 million customers or so .. I don’t think there’s a way they’d give up Metro, nor should they.

    • Sean sorlie

      totally agree with this. Metro is a strong brand while Boost and Virgin can easily be split off.

    • Brandon

      Metro has over 20 million customers if I’m not mistaken.

      • Yep, exactly why you don’t get rid of it.

  • Jay Holm

    Good.., just make it happen already!!!

    • Trevor Ketch

      But the jobs lost… :-

      • MisterListerSir

        But lowest unemployment rate in decades…

        The whole “Jobs lost” argument, (if you can call two words an argument) ain’t what it used to be, and is way more complicated than anything those two words could possibly convey. If you’re going to make an argument, at least put a modicum of effort into it.

      • (J²)

        Of course, that’s with any merger. It’s not really fair to put this in the CONS column because that will always be the case.

        The good news is T-Mobile is committed to replacing those jobs which is not usually the case. Of course, this does not mean like for like. Meaning the new positions may not replace equivalent positions or be in the same areas.

      • Santiago Vo

        If the merger doesn’t go through, Sprint will be gone within a year, so jobs will be lost anyway. Softbank is really tired of it.

  • The FCC and DOJ have sought ‘structural changes’ in the wireless and converged ICT industry for several years. The wireless industry has been highly concentrated following previous rounds of consolidation in which most of the smaller and regional wireless and other areas of broadband communications had merged. The HFC, hybrid fiber-cable, wireless, and tower infrastructure companies have all consolidated. The wireless segment has done so with AT&T and Verizon, both of which had sprung from their roots in wireline, fiber, IoT, and government market segments to increasingly dominate the wireless industry. This domination has grown despite efforts by T-Mobile and Sprint because they are not nearly as diversified – most of their business is in consumer wireless.

    The FCC has tried to stimulate new competition by providing discounts and set asides to auctioned spectrum and allowing satellite airwaves to be used. This has not worked and the wireless segment of communications remains as dominated as ever by what the DOJ had characterized as duopolists or nearly duopolists.

    The structural question that looks promising but unsettled is whether the network cell connectivity advantage that cablecos have to spring up 5G quickly and cost effectively when used in concert with the wide area networks and supply ecosystems that wireless operators can bring to the table will result in the alignment of the two complimentary broadband modes or lead to duplicative and sub-optimal use of national resources.

    While the US economy may hope not to be beaten by a state-orchestrated (not managed) communications-driven economy exactly like that of China, communications must be a well designed and capital-efficient effort. The regulators goal may be to engage the ‘invisible hand of free-enterprise’ to a higher degree than China. However, the industry is among the most highly regulated. Past experience of laissez faire capitalism led to massive interference as competitive broadcasters fought with megawatt powered stations. The industry is ‘state managed’ already. When AT&T’s dominance of landlines led to stagnation and lack of innovations, the government, after many years was forced to break it up. This could be needed down the road if cable, satellite, and other alternatives cannot get off the runway to take flight in the wireless space.

    • BobbieDooley

      Nice write up. Seems it’s time to invest in CocaCola again. Coke is enjoying a nice boost in value and an upgrade by Morgan Stanley.

  • Matt

    If Metro gets sold off and is no longer part of T-Mobile, I will likely go to AT&T or Cricket Prepaid.

    • Brandon

      This is why I don’t want the merger

    • Mike Smith

      Why?