Analyst: Integration Of T-Mobile & Sprint Could Take 5 Years

June 19, 2017 - Written By Dominik Bosnjak

A full integration of T-Mobile and Sprint in case the two decide to merge could take between three and five years, according to one Mark Stodden, Senior Vice President at Moody’s Investors Service, a New York City-based bond credit rating company. In a note to investors detailed on Monday, Stodden described the potential consolidation of the third and fourth largest mobile service provider in the United States as “operationally daunting,” suggesting that the two coming to a merger agreement would only be the first step in a lengthy process of consolidating their operations. Both could still benefit from such a move, with T-Mobile being set to save more than $3 billion in cost synergies on an annual basis once the hypothetical merged entity is fully operational, Stodden said.

A carefully planned and meticulously executed integration is of the utmost importance in the deal, Moody’s senior executive believes, noting how any issues in the process could have “catastrophic” side effects. T-Mobile would seemingly be entering the potential deal with more risks than Sprint, as the Bellevue, Washington-based wireless carrier is facing a reputation hit and increased churn rates, Stodden asserted, adding that the U.S. Federal Communications Commission (FCC) may end up forcing the company to sell some of its spectrum holdings, including those that the firm just managed to obtain at the agency’s latest auction, with that scenario also being said to depend on the actual operational details of its merger with Sprint. As Sprint’s spectrum portfolio is one of T-Mobile’s main motivations for a potential consolidation, losing any of these or its own holdings would be a significant blow to the company’s ambitions, Moody’s SVP implied.

While Sprint’s parent SoftBank was already effectively stopped from merging the firm with T-Mobile several years ago, the new Trump administration signaled that it’s much more open to such a deal than the one that preceded it, which is why the Japanese conglomerate and Deutsche Telekom opened new talks on the matter in recent months. Even though their consolidation is still far from being completed, the desire shown by both sides indicates that their merger plans will move forward in the future, and an update on the situation is to be expected later this year.