After years of flirting with the idea, Sprint and T-Mobile are reportedly nearing a merger. The two companies previously discussed merging twice, first in 2014 and again in 2017.
With so few options available nationally in the wireless market, the deal could be complicated to pull off. If successful, though, it would merge the third and fourth largest wireless carriers.
According to reports, the merger would give the combined company approximately 100 million customers. This number would pass AT&T’s 93 million. However, it would still fall short of Verizon, which boasts 116 million on its network.
T-Mobile is no stranger to merger discussions. The company tried to work with both AT&T and Sprint in the past. Those negotiations, however, were cut short due to regulatory concerns.
Sprint, T-Mobile Merger Faces Many Hurdles
The most significant hurdle in a potential partnership between the companies is convincing others it’s beneficial to customers. Antitrust regulators would have to decide that losing a competitor in a limited market is helpful.
That is no simple task and is the reason previous talks stalled. Still, Sprint and T-Mobile are giving it another shot. Some say the wireless providers will argue that competition is rising.
Cable companies are jumping into the wireless game, potentially taking customers away. Charter Communications and Comcast both now offer wireless services. They don’t pose a significant threat yet, though, as Comcast hold under 600,000 wireless customers.
Still, the companies could argue a merger would help them survive a rise from new competitors in wireless service.
Another potential crack in the framework could be both companies’ ownership. Foreign companies own both Sprint and T-mobile. Softbank, a Japanese group, owns Sprint and T-Mobile belongs to Deutsche Telekom of Germany.
With neither company’s ownership in the United States, it could be difficult to get a merger past U.S. regulators. President Donald Trump has expressed displeasure for corporate mergers in the past as well. During his 2016 campaign, he picked apart AT&T’s proposal to buy Time Warner.
It appears that Sprint and T-Mobile may be near agreement, but it might not matter in the end. With so many hoops to jump through, the sides could ditch the idea as they did in the past. Still, it will be something to keep an eye on in the wireless world.