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