T-Mobile/Sprint Merger Seen As The Only Sensible Choice

August 22, 2017 - Written By Daniel Fuller

Merger and acquisition rumors among carriers and telecoms have swirled in recent months, but analyst firm MoffettNathanson says that a merger between Sprint and T-Mobile would make the most sense right now, given the two companies’ current standing and assets, along with the state of the market. Craig Moffett of MoffettNathanson said that other companies’ potential plans to merge are less compatible with the current market. Still, the potential marriage of Sprint and T-Mobile faces a wide range of issues, no matter how suitable it may be for the current state of the market.

Craig Moffett said that the two smaller carriers may find it useful to combine forces, and mostly spectrum, against their larger rivals, but that the value of such a move was already present in their current and potential share prices. While this did not necessarily account for the two companies’ future efforts in 5G, potentially working together and wielding the largest spectrum arsenal in telecom, current shares do show optimism for a deal in trading, which likely means that going through with a merger would not actually result in an immediate jump in stocks. Essentially, this means that the two carriers, if they merged, would have to prove to shareholders, and of course consumers, that their collective strategy and resources are worth more than the sum of their parts.

Talk of a merger between Sprint and T-Mobile has been flying about for some time, but it has intensified and even become somewhat official in the face of the Trump administration’s relatively lax approach to regulating telecom and other industries, as demonstrated by its fairly quick and easy review of a deal between AT&T and Time Warner. Sprint has a massive amount of higher-range spectrum left over from the shuttering of its iDEN and WiMax networks, while T-Mobile has a large amount of lower-band spectrum, especially in the 600MHz area, thanks to its winnings in the FCC’s recent incentive auction. Combining the two would make for a hardy full-range spectrum library to base a 5G deployment on. On top of that, merging with T-Mobile would give Sprint a bit more cushion against its recent financial woes, and would improve both companies’ existing coverage by making roaming agreements easier to come to.