With the Sprint T-Mobile merger called off, what’s next for the wireless carriers? Many saw the merger as the best move for Sprint, which has been struggling in a competitive wireless market. The merger was less critical for T-Mobile. But that company has been a disruptive force in the wireless industry and hasn’t been one to simply maintain the status quo.
Sprint’s parent company Softbank has called off discussions with T-Mobile about a possible merger because it did not want to give up control, according to news reports.
The merger would have brought together the nation’s third and fourth largest wireless carriers in a market that has four nationwide carriers and increasingly few regional players. T-Mobile has been making market share gains since launching its Un-carrier strategy a few years ago. But Sprint has struggled to differentiate its offerings and has trailed competitors in network quality tests – a situation resulting, some say, from an inability or unwillingness to make network investments that keep pace with the rest of the market.
Other Merger Options?
In the past, rumors have circulated about a possible wireless- cable company or wireless-satellite company pairing. At a time when more and more video is consumed on mobile devices, some see the cable companies wanting to have their own wireless networks. And rumors that Sprint would merge with a cable company have surfaced in the past. But in today’s highly competitive marketplace, wireless carriers seem to have realized that focus on their core business is essential. Sprint reportedly now plans to invest more in its network.
It’s worth noting that Sprint and T-Mobile previously discussed a merger in 2014 but that deal also fell apart. Many industry observers expect the two companies to have another go at it at some future date. Some are saying that Sprint is likely to be in a weaker position by then and may be less likely to insist on control.
From T-Mobile’s point of view, a Sprint acquisition probably has more appeal than any other M&A activity the company might consider. And realizing that Sprint may eventually come around, I would expect T-Mobile to hold off on any other merger deals so that it can retain as much leverage as possible for a potential future Sprint deal.
