Over the past month, the rumor mill has been grinding again about a possible merger between
and Sprint Corporation. The plot thickened this week as both companies reported strong earnings but did not hold their typical investor calls. I wanted to dive a little deeper into the speculation and offer my take.
On paper a union looks promising. As the number 3 & 4 carriers by subscribers in the United States, a combination would bring them up to par with AT&T
and Verizon Wireless in scale. T-Mobile
has been particularly strong on the consumer side, offering aggressive pricing, unlimited data plans (that truly are unlimited), and content bundling. The result has been over 1 million new subscribers every quarter for the past 18 quarters.
Sprint brings a strong and growing enterprise business, with both wireline and wireless services and a focus on Internet of Things (IoT). The company’s parent owner SoftBank also owns ARM (used for low cost/small footprint edge networking solutions) and OneWeb (which promises to deliver a low-orbit satellite system that has the potential to provide backhaul support for future 5G networks). It stands to reason that Sprint could tap into both and leverage the results to its advantage.
I’ve written extensively about 5G and how its blazing throughput and low latency will support a multitude of new services that will likely change our lives. To do that, carriers must own and deploy to a range of spectrums. What’s impressive on this point is the combination of spectrum that would result from a merger between the T-Mobile
auction this spring, T-Mobile
made out like a bandit—snapping up nearly half of all low-band 600 MHz spectrum, giving it blanket coverage over the U.S. This is significant because governing bodies such as the GSMA have stated that this band has the potential to support the ultra-high speeds that many anticipate with 5G. In parallel, wireless network infrastructure companies such as Ericsson
have announced 600 MHz equipment support.
With its holdings of 204 MHz of spectrum, Sprint claims that it has more spectrum capacity than AT&T
, Verizon, and T-Mobile
combined. Add up the spectrum position of both companies and a combination seems to be a game changer: we’re talking about total coverage.
Would pink + yellow = green?
Mergers are difficult; some are successful, while others are not. However, there seem to be great synergies in a T-Mobile
/Sprint combination: a complimentary union of consumer and commercial businesses, an impressive collection of spectrum that would position a combined entity to deploy 5G at scale. Last but not least, in John Legere and Marcelo Claure (who I hope would both remain in a post-merger scenario), the two companies boast impressive leadership that’s not afraid to take risks and be aggressive. If you ask me, that all adds up to a lot of green.