T-Mobile Calls Sprint Most Logical Partner as Deal Talk Heats UpBy
Carrier also open to tie-ups with Dish, cable guys, execs say
Industry needs stronger No. 3 to take on Verizon and AT&T
T-Mobile US Inc., the fastest-growing U.S. wireless carrier, is gearing up for consolidation and figures to be a key player in potential deals involving Sprint Corp., a cable TV company or even a multiplayer coalition with Dish Network Corp., company executives said.
The most logical partner is Sprint, Chief Financial Officer Braxton Carter said at a conference in New York Thursday. The two could more cheaply deploy new airwaves in a future 5G network to compete with the larger Verizon Communications Inc. and AT&T Inc. That idea was quashed in 2014 by the Obama administration, which preferred a four-player market. The Trump government may not be as opposed.
The argument for a stronger third player is “even more true today because of Sprint’s precarious financial position,” Carter said. “The combined company would have the ability and the resources to really put all of that spectrum to work for the benefits of consumers and businesses everywhere.”
T-Mobile, the No. 3 U.S. carrier, is speaking publicly about deal possibilities at the same time that Sprint’s controlling shareholder, SoftBank Group Corp. and its Chairman Masayoshi Son, looks to restart talks about combining the two providers. SoftBank owns more than 80 percent of Sprint, No. 4 in the U.S.
Any deal involving T-Mobile would need the backing of Deutsche Telekom AG, which owns about 65 percent of the carrier. T-Mobile has become the main earnings and growth driver for the German parent, and Deutsche Telekom Chief Executive Officer Tim Hoettges has called it his “kingmaker asset.”
Wireless industry mergers had been on hold for a year due to a government spectrum auction that required participants to avoid negotiating deals with each other. The gag order lifted April 27. Now T-Mobile has joined other prospective partners including Dish in sizing each other up and touting the various options available.
Sprint CEO Marcelo Claure is in Washington Thursday for meetings with a variety of officials including regulators, according to a person familiar with the situation. There’s a great deal of pressure on Sprint, based in Overland Park, Kansas, to gain regulatory approval for a deal that could salvage its future. While the company has found new sources of financing and shown some success in attracting new customers, it’s still mired in debt and hasn’t turned a profit in about a decade.
T-Mobile, based in Bellevue, Washington, has other options, including a tie-up with Dish, a coalition with cable companies or possibly other, larger players in technology that may want to control distribution as the internet gets more mobile, said Chief Operating Officer Mike Sievert.
“Scale matters in this industry,” Sievert said. “We’re here to create value, we’ve shown you a value creation case as a standalone, and the rational question for us all to be asking is: Can we turbocharge that in a way that’s advantageous for our shareholders.”
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