During his testimony in the T-Mobile-Sprint merger trial, T-Mo CEO John Legere revealed that T-Mobile nearly merged with Dish Network back in 2015. Now documents show that the company could be considering a merger with Comcast.
A 2015 report called “Defining a Winning Position for the US Business Model” has been made public as part of the T-Mobile-Sprint merger trial. It was put together at the request of Thorsten Langheim, T-Mobile board of directors member, and it’s meant to show T-Mo’s position in the market and potential strategies for the future.
Mergers are discussed quite a bit throughout the report, and Sprint and Comcast are labeled as “most likely merger partners”. Under the plan, T-Mobile would continue to grow organically until 2018, then potentially merge with Sprint who would be “on the verge of bankruptcy” and have “clear scale gain and synergy potential” for T-Mobile. A subsequent cable merger with Comcast would follow, with the rationale being a move into mobile to help Comcast grow and to get video content onto mobile.
The documents also suggest that a merger with Altice is a possibilty, though they mention one strategic barrier being Altice as a “small cable player in US”.
While a merger with Sprint is described as the “preferred move” for T-Mobile, the report does acknowledge that such a deal could face regulatory barriers. Those include the thinking that “regulator will unlikely approve 4>3 mobile merger (even with Republican administration)” and “Even in case of bankruptcy regulatory approval might be unlikely”.
To help a T-Mobile-Sprint merger happen, the report says that T-Mobile should “strengthen lobbying activities for 4>3 merger with the ‘right’ people in Washington”; to “position Sprint as difficult merger asset” towards AT&T, Verizon, and cable companies; and to “not follow Sprint in price wars or irrational MVNO deals” in order to sustain ARPU. The report also mentions that T-Mobile shouldn’t “overplay offending consolidation stakeholders”.
Later in the report, there are steps for T-Mobile to prepare for Comcast buying T-Mo as a 2018 or later option, such as “be attractive bride by investing in network strength and growth of subscriber base” and to “signal merger interest with Comcast.” Merging with the Charter Group, America Movil, and Altice are also listed as 2018+ options, but Comcast seems to be the top choice in the report.
The report also outlines some steps that T-Mobile should take in order to maintain its merger options for 2018 and beyond. Those include “Don’t enter into MVNO deal that could complicate consolidation” and “Don’t trigger a price war in the US market”.
Because this report is from 2015, it’s difficult to know if T-Mobile is still considering a merger with Comcast as a possibility. T-Mo does seem to have followed some of the steps outlined in the report to help increase its chances of a merger, like by waiting for the presidential elections to attempt the Sprint merger. Of course, a potential merger with Comcast also appears to rely on T-Mobile first combining with Sprint, and right now it’s unclear if that’ll actually happen as we await the decision in the T-Mo-Sprint merger trial.
What do you think of this report? Do you think T-Mobile might try to merge with Comcast if it does end up combining with Sprint?