Here’s What The T-Mobile And Sprint Merger Could Mean For You
On April 29, mobile carriers T-Mobile and Sprint announced a merger, an all-stock deal worth $26 billion. In order for the proposed merger to happen, the companies must get approval from the FCC and antitrust regulators at the Justice Department.
If it comes to fruition, the resulting company would be the second-largest wireless carrier in the United States after Verizon. If you’re wondering how the possible merger could affect you, here is a breakdown of some of the potential impacts on consumers.
How The Merger Could Affect Prices
Because T-Mobile will be in control, current Sprint customers may need to get new phones if the deal goes through. While the carriers have promised that they won’t raise their rates, the merger will reduce the number of major carriers from four to three — and decreased competition may result in the companies putting in less effort to incentivize customers with lower costs.
“The general view on Wall Street is that as a result of this deal, there are likely to be job cuts and prices are likely to rise,” Blair Levin, a policy adviser for New Street Research, told The Washington Post.
How The Merger Could Affect Service
In a joint statement, T-Mobile and Sprint promised that the merger will result in improved service, saying customers “will benefit from increased speeds, coverage, and performance as the two companies’ networks combine.”
The companies argue that the merger is necessary to properly roll out a next-generation 5G network. A 5G network is essential for some of the most-anticipated technologies of the future, such as augmented reality and autonomous cars.
In comparison to T-Mobile’s current network, speed could be up to 15 times faster on average by 2024 as a result of the merger. They also say the new company will provide better service for rural customers.
“We will have such a large impact that it will cause AT&T, Comcast and Verizon, who are under-investing in 5G, to respond and invest more,” John Legere, current president and CEO of T-Mobile, who will serve as chief executive of the new company, said in a conference call with investors. “The U.S. is behind China in being a leader on 5G. We can’t let that happen — we need to respond together and we think we can drag the rest of the players with us even if they’re kicking and screaming.”
But critics say that we’re a long way off from being able to harness 5G technology to accomplish these ambitious goals.
“A lot of people are genuinely struggling to figure out, ‘What is the business case for 5G?’” Ramakrishna Maruvada, a telecom analyst in Singapore with Daiwa Capital Markets, told The New York Times. “Most operators do not think faster consumer broadband is a good enough reason to be pursuing a huge leap in technology.”
When Will The Merger Happen?
As of now, the question regarding the merger is not when, but if. A lot of issues must be addressed before the proposed deal can move forward. The merger is set to be complete by July 2019, but it would likely take between three and four years after that time for the companies to fully combine. Even if the merger makes it that far, it will likely be years until the changes are actually felt by consumers.
Craig Moffett, a telecommunications analyst at MoffettNathanson gives the deal 50-50 odds of being approved.
“It comes down to whether the D.O.J. decides to use the traditional lens of consumer welfare as measured by consumer prices, or whether they use an unconventional lens about access to new technologies,” he told The New York Times.