Does a T-Mobile Acquisition Make Sense for Sprint?

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Feb. 11 (Bloomberg) -- The Kerton Group Principal Analyst Derek Kerton discusses the telecom industry on Bloomberg Television's "Bloomberg Surveillance." (Source: Bloomberg)


Before we get to the big issue about the potential merger, let me get your thoughts on the earnings.

What a lot of analysts expected.

A very difficult time for them to bump up earnings when they are losing subscribers on a regular basis.

That is the crux of it for analyst like me.

You guys look at the earnings from the numbers and revenue.

I am looking at subscribers.

That is the basis on where you will be growing revenues going forward.

It is a lot better than it has been, but one of the problems they are having as their caught in a pinch.

You have at&t and verizon on the top side giving the marquee customers that want the widest nationwide covering.

Below sprint coming of the t-mobile's that are present in themselves is the one carrier -- un-carrier/ . then you have a wide range picking up consumers.

Of sprint in between the two sides.

They're not the marquee side and they are not the low side.

Is it just a dopoly?

Do we just wait for verizon and at&t to dominate?

I wish i could say was in, but there is a very real concern.

Those two companies have good strategic decision going forward.

We look at the carriers who have fixed assets and mobile asset is having a strategic advantage.

Security monitoring, media services, overlapping between home and mobile -- companies like t-mobile and sprint are not able to offer those quite as well as at&t and verizon.

What about the spectrum advantage?

I think that is one of the biggest differentiators if they can register -- leverage it long-term.

They have the most overt two ghz.

They can continuing -- continue offering unlimited bandwidth.

They can offer faster speeds long-term than some of the other carriers.

I think that is the main competitive advantage that they have got to work on.

At&t and verizon dominate wireless markets with over 50% market share if you add them together.

It looks like the department of justice will not allow this merger between sprint and t-mobile.

What is the future for sprint and t-mobile if they have to go at it alone?

It is very difficult.

Deutsche telekom is interested in merging with softbank, t-mobile and to one competitive competitor.

The department of justice feels very strongly that t-mobile is doing a good job.

They want to keep it independent so it can keep wishing limits down there.

That does not look good for sprint.

Thank you for joining us from

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