What's Happening in the US Telecom Industry?

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Part 13
What's Happening in the US Telecom Industry? PART 13 OF 18

Who Would T-Mobile Sell to If It Must?

Favorable environment for telecom consolidation

T-Mobile (TMUS) recently poured cold water on speculations that the company wanted to revisit merger discussions with Sprint (S) now that sentiments in Washington seem favorable for industry consolidation.

Sprint, which is owned by SoftBank, one of the companies that have pledged to invest billions of dollars to create new jobs in the US (SPY), attempted but failed to acquire T-Mobile in 2014. T-Mobile was also once eyed by AT&T (T), which made a move that later cost it a ~$4 billion breakup fee.

Who Would T-Mobile Sell to If It Must?

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Using AT&T’s money

T-Mobile used the breakup fee from AT&T to strengthen its operations, especially improving the speed and availability of its network to better compete with the larger rivals. The investments bolstered its competitive edge to the point that it was able to change the rules of the game such as spearheading the abolishment of the traditional two-year carrier contracts and bringing back unlimited data plans. Those moves also helped T-Mobile to leapfrog Sprint as the US number three national carrier by subscriber.

T-Mobile views deal with a cable company favorably

Speaking at the Deutsche Bank investor event in March, T-Mobile’s CFO Braxton Carter dropped important hints about what the company’s next merger moves could be. He implied that T-Mobile would be more interested in entering merger talks that promise a huge payoff if the deal falls apart because of regulatory hurdles.

Carter further hinted that restarting merger talks with Sprint was something that T-Mobile didn’t want to do, instead suggesting that merging with a cable company like Comcast (CMCSA) or Charter Communications (CHTR) makes much more sense.


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