Sprint and T-Mobile need to merge, or one will die says analysis

New Street Research has prepared a report for its clients that comes to the conclusion that T-Mobile and Sprint must merge, or else one of the carriers won't survive. Yet, the same report cautions that an attempt to merge the two mobile operators right now, would probably get blocked by U.S. regulators. In fact, earlier this year, following rumors that a deal between the two carriers was being discussed, Sprint Chairman Masayoshi Son and CEO Dan Hesse visited the FTC and FCC to get the lay of the land. Both times the executives were told that a Sprint-T-Mobile deal would be challenged by the agencies.

The FCC and FTC would love to see another carrier challenge the Verizon-AT&T duopoly. On one hand, a combined Sprint-T-Mobile might present more of a challenge to the pair at the top. On the other hand, there is a thought among the regulators that they should allow T-Mobile to stay independent. The upstart carrier has been leading the industry in pro-consumer innovations, and some staffers at the FTC and FCC would love to see how far T-Mobile can go.

According to New Street Research, both Sprint and T-Mobile do not have enough revenue to cover their fixed costs. The analysis says that the two will need to bring in $10 billion over the next year and a half to be competitive. The report adds that both companies need to buy additional spectrum in order to keep up with demand.

The bottom line is that New Street suggests that both companies be allowed to merge now, which would lead to lower costs for the companies, and lower prices for consumers. If a merger happens because one or both carriers are faltering, the merged company will not be in a good position to challenge the duopoly at the top.

Source: fiercewireless.com