Sprint's Son on T-Mobile Merger: 'I Want to Be No. 1'

 
 
By Michelle Maisto  |  Posted 2014-03-11 Email Print this article Print
 
 
 
 
 
 
 

If Sprint and T-Mobile were allowed to merge, Masayoshi Son told Charlie Rose during a recent interview, he'd instigate a "massive price war."

Sprint Chairman Masayoshi Son is still intent on the idea of merging Sprint, the nation's third-largest carrier, with T-Mobile, its fourth largest. Doing so, Son recently told interviewer Charlie Rose, would turn an industry duopoly (between mega carriers Verizon Wireless and AT&T) into a fair, three-way fight.

"There are two big duopolies, and they take more than 100 percent of [the] total industry free cash flow—total industry's profits. They are concentrated to have 90 percent. So, here come the two little ones, who are not able to fight without enough scale, and that's no good. I think that situation needs to be changed," Son told Rose.

With the scale that would result from combining T-Mobile and Sprint, Son continued, the industry could have a fight between "three heavyweights."

He went on, "If I could have a real fight, not a pseudo fight, I'd go into a massive price war."

Here Rose inserted: "That's your pattern. … You undersell everybody. You're willing to forgo profits in order to gain market share."

"Exactly. I want to be No. 1," said Son, speaking calmly and straightforwardly. "If we were No. 3, and if we had enough chance, I want to be No. 1. So, I would go [into a] price competition, very much aggressively, and [focus on] network competition to create the world's best network."

Later in the show, Son discussed the larger implications of building a high-speed, world-class network.

"If I can help [bring the] information revolution to mankind, I don't have to do everything. I can bring everybody else's talents. I can bring the infrastructure. … I don't have to build the Ferrari or the Honda, I can create a highway for all the beautiful automobiles. I can create … the entire ecosystem for the automobile revolution. So that is what I am trying to do," Son said. "I am bringing [the] information revolution. But for these Internet devices [today], the highway itself, as infrastructure, is not good enough. That is a big problem."

The Charlie Rose show posted two clips from the upcoming program on YouTube March 10.

In December, the Wall Street Journal first reported that Sprint and T-Mobile were in talks about a merger. The news wasn't well-received by an industry with still too-fresh a memory of AT&T's nine-month, and ultimately unsuccessful, struggle to acquire T-Mobile in 2011.

Canada, which has three major carriers, also presents a strong case study of the need for at least four.

In February, the Journal reported that Son and Sprint CEO Dan Hesse were taken aback by the strong public opposition to the news and were reconsidering their strategy.

Federal Communications Commission (FCC) Chairman Tom Wheeler has said that he will keep an open mind but that he's generally skeptical of any deal that would limit competition in the industry, according to the Journal.

"What are your chances?" Rose asked Son during the interview, regarding whether Sprint could buy T-Mobile.

"I don't know," Son answered. "But we have to give it a shot."

 

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