Consolidation Will Happen One Way or Another

By Don Reisinger  |  Posted 2011-09-06 Print this article Print


5. Consolidation will eventually happen

Like it or not, the wireless industry is poised for consolidation. AT&T might not be allowed to combine with T-Mobile USA at this juncture, but in the next several years expect at least one other company to acquire another and for that deal to eventually be approved as the market continues to fluctuate. Before that happens, why shouldn't Sprint and T-Mobile insulate themselves and merge? It would cut off future consolidation threats, and it would make the combined firm far more competitive. It's a win-win.

6. Deutsche Telekom obviously wants a deal

Deutsche Telekom, the company that owns T-Mobile USA, is obviously ready and willing to accept a deal to get out of the U.S. business. After all, the firm readily accepted AT&T's bid, even though it has gone out of its way to take aim at the wireless giant in the past. But it might not take much for Deutsche Telekom to bite on a merger with Sprint. The deal won't be nearly as big, but it could expect to own a much larger share of Sprint to make the deal happen. In the AT&T deal, Deutsche Telekom was only promised 8 percent of AT&T. That wouldn't happen in a Sprint deal.

7. Greater economies of scale

One of the nice things about merging is that the newly formed company can benefit from economies of scale. The firms could spend less in infrastructure, reduce capital spending, find areas to save money on their workforces, and more. The result would be a more agile company that would be better-equipped to take on Verizon and AT&T.

8. Maybe Apple will come along

So far, Apple has balked at bringing its iPhone to Sprint's or T-Mobile's networks. Some have speculated that the decision is due mainly to Apple's desire to maximize its chances of selling devices, and with Sprint and T-Mobile having a fraction of the number of customers AT&T and Verizon have, the iPhone maker sees little reason to bring its handset to Sprint or T-Mobile. However, if the firms do merge, all that could change. Now, Apple would have three large companies that could carry its iPhone, and all parties would benefit.

9. More options would be offered to customers

One of the problems in a merger between Sprint and T-Mobile is that the companies are currently operating their networks on different technologies. Sprint uses CDMA, while T-Mobile uses GSM. However, that might not be such a bad thing. Perhaps a combined company could use that to offer more choice to customers. Those who want GSM can have that. Those who are looking for CDMA can opt for that technology. Or, if it wants, the firm could just invest heavily in GSM and allow CDMA to gradually fade away, thus helping extend T-Mobile's service nationwide. In either case, it appears customers could benefit heavily from a merger.

10. A pricing war?

The wireless industry is unlike any other. Rather than several companies differentiating their products to attract customers, the wireless carriers today offer the same basic plans at the same prices. In fact, if one compares an individual 700-minute plan from Verizon and AT&T, they'll find that they're offered at the same price. However, both T-Mobile and Sprint have not followed suit in every case. Sprint still has unlimited data, and T-Mobile offers attractive plan pricing. Perhaps if the two firms combine, a pricing war would ensue, and customers, looking for the best deal, might just benefit.

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Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Since then, he has written extremely popular columns for, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at

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