Sunday, January 12, 2014

T-Mobile CEO "I Have A Couple Things To Say" In Regards To Deal With Sprint

Chief Executive John Legere said he wasn’t going to drool and decline to comment like the typical public company CEO when hit with a question about mergers and acquisitions.
“I have a couple things to say about it, actually,” he said.
A deal with Sprint would provide significant scale and capability, Legere said “the T-Mobile Uncarrier business, the people, the brand the attitude is here to stay. … I think what we’re doing in any scenario we will prevail.”
T-Mobile the fourth largest U.S. carrier, said this week it added 800,000 of the lucrative phone postpaid customers, bringing its total additions for the year to more than 2 million.
Overall, including prepaid customers and tablets, T-Mobile added 4.4 million customers in 2013, turning around years of losses.
Sprint, meanwhile lost more than 2 million customers in the first nine months of 2013, and executives are signaling there will be more bad news to come.
While some past acquisitions in the wireless industry have been done in large part to acquire spectrum, future deals should be driven by brands, Legere argued.
Sprint is a pile of spectrum waiting to be turned into a capability, Legere said. T-Mobile, on the other hand, is a change agent and a maverick, things the United States feels is extremely important, Legere said in a nod to language often used by antitrust officials.
T-Mobile chief financial officer Braxton Carter made a similar argument in an interview following the event. Who is the innovator in the industry? What is the brand that’s really shaking things up? Where is the momentum going? he asked. It’s inconceivable under any strategic scenario that you wouldn’t want to capitalize on that going forward.
The Justice Department, which has made clear its interest in keeping four national competitors, is expected to be a huge hurdle to a deal. Verizon CEO Lowell McAdam, in a meeting with analysts Tuesday, said antitrust officials are getting what they wanted when they shot down AT&T’s $39 billion deal to buy T-Mobile two years ago.
I think they are beginning to see some of the things that they were hoping to see out of four, McAdam said "My guess is they are going to want to play that hand out".
Earlier this week, T-Mobile’s Carter seemed to toss out a possible solution, propping up a new competitor by doing a deal to let Dish Network use the carrier’s cellular network.
"Doing a deal would open up some other very interesting strategic opportunities", he said. By doing a hosting deal with another party you could effectively create another nationwide carrier. Again, that could be very pro-competitive in the U.S. marketplace".
In an interview Wednesday, Carter said “there are certainly regulatory overtones here”, but declined to elaborate on whether helping Dish offer wireless service would help a merger between Sprint and T-Mobile get past regulators.
T-Mobile might be onto something, the Justice Department stressed the need for four carriers as recently as this spring. Tom Wheeler, the new head of the Federal Communications Commission, which reviews telecom mergers, said last month that, the mobile business is today, with four carriers, a competitive business, and it’s important it stay that way.
Facilitating a new entrant could assuage such concerns. Regulatory experts in Washington say Sprint will need to do something more than just arguing that merging the Number three and Number four carriers will make for a stronger competitor to an industry dominated by AT&T and Verizon, and analysts including Jonathan Chaplin of New Street Research and Kevin Smithen of Macquarie have begun to argue that setting up a competitor will need to be part of a deal.
Chime in below, what is your take on a possible T-Mobile and Sprint merger?

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