According to a source familiar with the matter, FCC Chairman Tom Wheeler voiced skepticism regarding number three U.S. carrier Sprint’s proposed buyout of number four carrier T-Mobile. Wheeler met Monday with Sprint Chairman Masayoshi Son and Chief Executive Dan Hesse where he stated his wariness, but also said he would keep an open mind. Negotiations are very preliminary, so expect news on this merger to continue for quite a while, and no one from Sprint, SoftBank, T-Mobile, or the FCC is officially commenting yet.
Sprint has a very steep and uphill battle trying to convince the FCC and Justice Department that a consolidation of the number three and number four U.S. carriers would increase competition. It was just two years ago that a deal between the number two carrier AT&T and T-Mobile was rejected. Since then, T-Mobile has improved itself and is riding a wave of new and newly converted customers as well as a new, ever-expanding LTE build-out. Good luck Sprint, because Wheeler, along with Assistant Attorney General William Baer “have both hailed the 2011 rejection of a merger between AT&T and T-Mobile as yielding a more competitive market that is better for consumers”.
My initial thoughts on this more-than-likely long and drawn-out drama:
As a betting man and newly converted T-Mobile customer (from Sprint ironically), I’m predicting (and hoping) that this deal goes down in flames much like the proposed Magenta Death Star did two years ago. Consolidation of the marketplace rarely benefits consumers and the FCC and Justice Department are well aware of this as statements from both have shown. If talks are as legit as they seem, there will probably be break-up terms similar to the $3 billion cash money and $1 billion in spectrum that AT&T paid T-Mobile because their deal fell through. If this happens, T-Mobile will emerge stronger than ever and Sprint will become John Legere’s latest piñata just as it begins to recover from its self-inflicted wounds.
Source: Reuters
