It’s been a whirlwind week in the wireless industry. Verizon disturbed the hornet’s nest when it unveiled its Verizon Unlimited plan, which prompted direct responses from T-Mobile, Sprint and AT&T (in that order). Now were hearing about another shakeup that could be coming down the line — a merger between Sprint and T-Mobile.
We’ve heard talks about such a mashup before, but it appears that the big change this time around is that Sprint’s parent company, Japan's SoftBank, is willing to cede control of the company. The merger would bring together America’s third-place (T-Mobile) and fourth-place (Sprint) wireless carriers, putting the combined company in a better position to take on Verizon Wireless (first-place) and AT&T (second-place).
The last time that merger talks were underway, SoftBank was the pursuer, looking to acquire T-Mobile. That deal, however, was batted down once U.S. antitrust regulators got a whiff of what the combined company would do to competition. Now, however, it is T-Mobile US parent Deutsche Telekom that is in the stronger position.
Sprint has found itself stagnating in the U.S. market, and has watched as T-Mobile leapfrogged it to take over the third-place position. Lead by colorful and irreverent CEO John Legere, T-Mobile has carved out a niche as a carrier that is willing to take on Verizon and AT&T with attractive pricing, fun promotions, and innovative plans (which are often later copied by the competition).
Sprint, on the other hand, has been relegated to competing mainly on price, as witnessed by the most recent unlimited data wars. Whereas Verizon Unlimited struck the first blow with a monthly price of $80 for a single line, T-Mobile hit back at $70 per month. Sprint, looking to add consumers by any means necessary, offers comparable plan features for just $50 per month.
It remains to be seen if regulators will have the stomach for a second round of merger talks between Sprint and T-Mobile. With that being said, neither company will be able to discuss a merger until after March 31st due to anti-collusion rules that are in place during the current wireless spectrum auction.