A merger between the countries third (Sprint) and fourth (T-Mobile) carriers isn’t something the regulators are in favor of. However, Sprint CEO Dan Hesse is still trying to convince the mass public that a merger between both T-Mobile and Sprint would greatly In Sprintbenefit the market. Hesse said in an interview today with Bloomberg TVthat he is certain that a bigger, more stronger No. 3 will make the No. 2 (AT&T) and No. 1 (Verizon)to be more competitive, bringing a better price war than the unsustainable price war we are currently in right now.
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While speaking to Erik Schatzker and Stephanie Ruhle Dan Hesse said “A stronger No. 3 will get one and two to react more aggressively so everybody benefits, If you are smaller, the big two do not react as aggressively.” Now there has been some what of a price war in the mobile industry with T-Mobile introducing their Simple Choice Plan, Sprint offering their Framily plan, AT&T’s Mobile Share Value plan, and Verizon’s More Everything Plan. The prices of these plans are good, but Hesse believes that pricing could be better.
“There are a lot of emotions that consumers see as positive, but how sustainable is that?” Hesse said of the price wars.”
If the merger were to go through it would essentially cause both Verizon and AT&T to be more competitive with their monthly pricing, which means cheaper plans for consumers. Both T-Mobile and Sprint are still struggling a little bit financially, but Sprint has seen a big loss in customers due to their Network Vision. While T-Mobile has seen a big push in customers, adding 2.4 million customers last quarter. Sprint knows that with the help from T-Mobile they would be able to grow their subscriber number, build their network even faster, and put more money into advertising.
“T-Mobile and Sprint have to invest more per customer in their network,” Hesse said. “Think of a nationwide network, it largely affects costs. It is like a jumbo jet. AT&T and Verizon, because of their size, can put more customers on that, a divide it among more customers and can spend more money on advertising.” We’re thinking that Softbank/Sprint will be making a bid to acquire T-Mobile sometime this summer, but I don’t think we will see the bid get much steam, unless Sprint can improve their convincing game.