For years, it’s seemed inevitable that the U.S.’s big four wireless carriers would eventually become the big three. Now it appears to be happening: T-Mobile US (the third-largest carrier) and Sprint (the fourth) have agreed to merge in a deal that values the combined company at $146 billion. T-Mobile will be the surviving corporate brand name and T-Mobile’s feisty CEO, John Legere, will be CEO. The transaction follows a near-merger last fall that fell apart at the last moment.
The two companies are pitching the merger as being a boon for deployment of next-generation 5G wireless service. They also say it will create jobs rather than kill them, a stance it’s reasonable to be skeptical about until the two companies are one and have wrung all the potential cost savings out of the deal.
T-Mobile cites "job creation" in this merger, but that's not what happens with mergers like this. Massive store closures save money from "redundancy." Handset and equipment vendors have fewer customers, who buy less bc of greater efficiency.
— saschasegan (@saschasegan) April 29, 2018
What will it mean for competition? Well, fewer companies in a market generally mean higher prices. But if the combined T-Mobile/Sprint provides a more robust threat to the dominance of AT&T and Verizon–the two true giants that Legere likes to call “dumb and dumber”–the loss of one player might not be tragic.
In any event, it’s encouraging to see T-Mobile surviving and Legere staying in charge. The company is responsible for most of the consumer-friendly innovation in the wireless industry over the past few years, none of which would have happened if AT&T’s 2011 bid to buy T-Mobile had succeeded. We’ll know a combined T-Mobile/Sprint benefits wireless customers–regardless of their carrier–if it keeps behaving like T-Mobile.