Will T-Mobile, MetroPCS and Sprint Deals Change the Industry?
With T-Mobile and MetroPCS merging, and Sprint and Clearwire being courted by Softbank, in a year's time we could see a different, more competitive wireless industry.Verizon Wireless, AT&T, Sprint and T-Mobile—the nation's four largest wireless carriers, respectively—along with their millions of wireless subscribers, are likely to be affected, to varying degrees, by the news of the last few weeks. Shifts in the size, and so power, of the carriers changes their ability to compete at a national level and ultimately the prices they offer subscribers, as we learned from AT&T's failed 2011 bid to purchase Deutsche Telekom (DT)-owned T-Mobile. U.S. federal regulators felt so strongly that that an overly large AT&T would create two dominating carriers (AT&T and Verizon) and ultimately higher prices for consumers that they not only disapproved of the deal, but sued to stop it. This summer, Softbank, Japan's third-largest carrier, began talks about financially backing a combined T-Mobile and Sprint, which DT, having learned its lesson with AT&T, ultimately backed away from, fearing regulators would again object to a carrier of that size, according to an Oct. 11 report from CNBC. What happened from there, the public is now learning, is that DT decided that a T-Mobile merger with U.S. No. 5 carrier, MetroPCS, would be far less objectionable—and rightly so; MetroPCS has about 9 million subscribers to T-Mobile's 33 million and Sprint's 56 million; AT&T and Verizon, in nearly a league of their own, have 105 million and 111 million subscribers, respectively—and Softbank then began focusing on Sprint and its partner Clearwire.
If both deals go through—if Softbank buys a majority share of Sprint, giving it the money it needs to roll out a robust Long Term Evolution (LTE) network, and T-Mobile and MetroPCS team up to create a firecracker of a value-focused player—in a year's time, might the wireless industry be a different animal?