T-Mobile and Sprint Announce Plans for New Merger

Sprint and T-Mobile have announced new plans for a merger. If you have been following along you will know that this is certainly not the first time this has been tried. This time, however, the two companies believe they have an ace up their sleeves, the upcoming launch of 5G networks.

Third Times the Charm

This is not the first time this merger has been proposed, this current iteration marks the third time the two companies will attempt to merge. The first attempted merger took place in December 2013, when SoftBank( Sprint’s parent company) proposed a $20 billion dollar buyout of the company. This was met with concerns of potential antitrust law violations. This is what eventually halted the negotiations as Sprint backed out of the deal noting the unlikeliness of the eventual success.

The second time this deal was attempted was a complete reversal of the original deal. SoftBank was going to sell it’s controlling shares of Sprint to Deutsche Telekom (T-Mobile’s parent company). This was offered because Sprint was struggling to continue to grow in the U.S. market and SoftBank believed the Trump administration would be more lenient on the regulatory oversight that would otherwise stop the deal. This merger did eventually fall apart as both companies could not agree to the final terms of the deal.

This brings us to late April of 2018 and now the merger is back on the table.

 

Why is This Being Attempted Again?

T-Mobile and Sprint are undeniably smaller than both AT&T and Verizon. This means that they typically are not able to compete in as many markets or provide service to the same extent as their larger competitors. Remedying this has been a driver for these companies throughout all of the past attempted mergers.

This time, however, the two are taking a new stance. They argue that this merger will actually be crucial to properly implement a nationwide 5G network. They argue that even AT&T and Verizon will not be able to properly implement a competitive 5G network. This would mean that China or South Korea could end up being the world leaders in 5G technology.  While certainly not the end of the world this could end up costing the U.S. an estimated 3,000,000 jobs and $500 billion dollars of GDP growth they estimate.

What This Merger Could Mean For American Consumers

While there are undeniable opportunities that exist if America maintains it’s telecom leadership. Critics of the proposed merger are noting that the deal could still be bad for the average American. As anyone with even a basic concept of economics can tell you, fewer companies providing goods and services leads to a reduction of competition, innovation, and other consumer friendly practices. This means your phone plan prices will be higher and there will be fewer incentives for carriers to expand services and infrastructure.

This is all of course speculation, no one truly knows what outcome this merger would have for consumers. While it could be assumed that the reduction of competition could be bad for consumers similar to the airline industry.  However, it is possible that the economic growth from the expansion of 5G could be more profitable for Americans as a whole.

For more information from T-Mobile and Sprint on the details of the merger, you can find their statements on their site, AllFor5G.com.

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