Sprint and T-Mobile US recently filed their application with the FCC for approval to merge. In that application, they both state they are in a much weaker position than they normally talk about to the public. After years of tooting their horns, this other side of the same story is surprising. What does it mean?
On the one hand, to the outside world, both Sprint and T-Mobile point to subscriber growth and numbers that look better than ever. They both talk to the marketplace about the rapid move to 5G and how they are a leader in that space. They also talk about how they will be an even stronger leader if they get together.
On the other hand, in their FCC merger request filing, they say they are weaker than that, and in fact, they need to merge to survive as the wireless world transforms to 5G over the next few years.
T-Mobile is a great marketer but has little wireless data spectrum. Sprint has loads of spectrum but has trouble marketing. That’s why together, they would make a dominant third-place competitor. It would pool the strengths of both companies and counter the weaknesses each have.
These are two opposite stories. Let’s try and peel the onion back and find the real truth, as best we can.
T-Mobile and Sprint stretching the truth in marketing
The question is, does this merger make sense from an industry perspective? AT&T Mobility and Verizon Wireless are the two strongest companies in the space. Going forward, T-Mobile and Sprint are the weakest in the 5G space moving forward.
The choice is a powerful three-player industry, or we can have two strong and two weak players. From that perspective, it makes sense to let T-Mobile and Sprint merge.
However, there is nothing wrong with the actual progress T-Mobile has made. It’s just that they exaggerated it. This now makes it more challenging to uncover the truth and complete the merger. So, why did they do this to themselves?
Remember, just a few short years ago they were not on anyone’s radar. They missed the move from 2G to 3G when the iPhone and Android changed the marketplace.
T-Mobile was in trouble. They needed a merger. That’s when AT&T tried and was denied. As a result, T-Mobile obtained some of AT&T’s spectrum and cash when they broke up. That was the raw material they needed to survive.
T-Mobile CEO John Legere shaped the conversation
When T-Mobile hired John Legere as CEO, he used this spectrum and cash to start their new growth path. And they have seen strong growth over the last several years.
Legere did a great job of talking about the changes the marketplace was going through and that this could be attributed to T-Mobile. And while this strategy did help T-Mobile with growth, the wireless industry was changing with or without them.
When Sprint was acquired by Softbank several years ago, the executive management team completely changed. It has been run by Marcelo Claure as CEO over the last several years. The Sprint of today is a very different company than the company we’ve known over the last several decades.
Sprint had some solid promotions and has gained some customers, but in the end, they are weaker, not stronger. The FCC application seems to say that Sprint cannot make it on its own. It must merge in order to survive. So, apparently, the Softbank desire to enter the US marketplace has not been successful — at least not so far.
The merger application filed with the FCC seems to show the other side of the coin. The 5G side. While they have seen growth under 4G, as we move to 5G both T-Mobile and Sprint need help. They need each other.
This is the balancing act every CEO must go through. They must paint their companies in a way to attract investors, customers and workers. Regulators often hear the other side of the same coin. The story depends upon the audience.
Should T-Mobile, Sprint merger be approved?
Should they be approved to merge? It’s still too early to say, but one reason to give the green light is to enable the companies to transform in the 5G world and continue to be a player. Without the merger, both Sprint and T-Mobile appear to be weaker going forward.
Remember, where Sprint has loads of wireless data spectrum, they don’t have the financial strength to build out their network. T-Mobile has the marketing pizazz but does not have spectrum. Putting these two companies together makes sense from that 5G perspective. They will still be in third place, but a stronger third place, which is better than two separate, smaller and weaker competitors.
The post Kagan: A reality check for the Sprint and T-Mobile FCC merger application appeared first on RCR Wireless News.