Like one of those horrid ABC reality dating competitions where spurned contestants from previous seasons come back to get their “chance at love,” T-Mobile is once again being pursued by a moneyed suitor with unlimited data. Will the wireless company find true romance with Sprint or will the spoilsports in D.C. ruin these wedding plans like they did for AT&T?
According to the Wall Street Journal, Sprint is the latest company to pronounce its deep affection for T-Mobile, and is doing the mergers-and-acquisition version of talking to a potential spouse’s parents by making the regulatory rounds before popping the question.
The deal would require the thumbs-up from the Federal Communications Commission and the Justice Dept., both of whom ended AT&T’s hopes of living in wedded bliss with T-Mobile (and thereby eliminating a pesky, low-cost competitor from the market).
Part of the reason that T-Mobile is in constant talks for takeover is the fact that parent company Deutsche Telekom really wants to unload it, like a parent whose kid won’t move out unless he/she gets married to someone with more money.
T-Mobile did do a little acquiring of its own in recent months, picking up upstart wireless provider MetroPCS. Similarly, Japanese telecom biggie SoftBank recently invested billions in Sprint, getting 80% control of the company in return.
But would a combination of T-Mobile and Sprint be too big for regulators to approve? With around 53 million combined subscribers, a merger would still leave AT&T and Verizon Wireless as the two largest players in the market with 72 million and 95 million subscribers, respectively.
Some have argued that the only way for either Sprint or T-Mobile to survive in the long run is for them to combine forces, that the only way AT&T and Verizon will take them seriously as a competitor is if they have enough of the market to effect change on their own.
We would contend that T-Mobile, in spite of being the smallest player among the four remaining nationals, has still been able to change the wireless market. Earlier this year, it did away with phone subsidies, breaking out the cost of a new device from the monthly cost of a customer’s data and voice plans.
While none of the others have followed suit so thoroughly, AT&T did recently lower prices on plans for customers who own their own phones, or who are part of the AT&T Next upgrade program. Either way, this is the second-largest wireless provider encouraging customers to pay for their own phones, something we doubt would have happened if T-Mobile hadn’t done it first.
Would a combined T-Mobile and Sprint keep this competitive mindset, or would it be tempted to test the waters and see if its customers are willing to pay the premium prices charged by AT&T and Verizon?
This is all very premature, but it’s the kind of thing you have to think about when you start to consider an America with only three major wireless players.