T-Mobile (TMUS) has lost a major business client as it works to save its Sprint (S) merger deal. Ting Mobile recently announced that it wouldn’t renew its contract with T-Mobile. Ting’s existing agreement with T-Mobile expires in December. Ting, a subsidiary of Tucows, is a wireless phone service provider that doesn’t have its own network infrastructure. Instead, it rents network space from the operators that own it to offer its wireless service. Google also rents network space from Sprint, T-Mobile, and US Cellular for its Google Fi wireless service.

Ting has been renting network space from Sprint and T-Mobile. But the delayed T-Mobile–Sprint merger has forced Ting to rethink its relationship with the companies. Therefore, Ting has decided to bring a new network partner on board and drop T-Mobile.

Ting’s decision to drop T-Mobile as its network partner stemmed from a delay in the closing of the T-Mobile–Sprint merger. T-Mobile and Sprint agreed in April last year to combine their operations. The merger will see Sprint become part of T-Mobile. However, the companies have yet to secure all the regulatory clearances they need to finalize the transaction. In fact, some states have sued to block the T-Mobile–Sprint merger from happening, arguing that it will hurt wireless consumers. Some labor unions have also opposed the merger, arguing that it would lead to massive job losses.

Ting keeps its network relationship with Sprint ahead of the merger

Ting expected the T-Mobile–Sprint merger to be complete by now. Therefore, uncertainty over the fate of the merger led Ting to rethink its network relationships with T-Mobile and Sprint. The reassessment of the relationship led to Ting dropping T-Mobile and keeping its contract with Sprint. It’s extended its network contract with Sprint for an extra year through September 2020. Ting said that the extension would allow it time to see what happens with the merger. After that, it will make an assessment as to the best course of action.

What’s the Cost of the T-Mobile–Sprint Merger Delay?

If T-Mobile succeeds in absorbing Sprint, there’s hope it will still be able to get business from Ting. However, if the merger with Sprint falls through, the loss of the Ting contract could be a huge blow to T-Mobile. The company will be without a major business customer, making it vulnerable to escalating wireless competition. Cable companies Comcast and Charter Communications have ventured into selling wireless phone services, consequently increasing wireless competition. Wireless incumbents such as T-Mobile are under immense pressure to defend their turf. T-Mobile exited the first quarter with 81.3 million subscribers on its network.

T-Mobile is wary of grooming a powerful rival

Even if T-Mobile and Sprint succeed in merging, they might not get everything they want. US antitrust regulators are pressing T-Mobile and Sprint for concessions before they’ll sign off on the merger agreement.

To save the deal, T-Mobile and Sprint have offered to divest certain assets. They’re willing to sell Sprint’s Boost prepaid wireless brand and some spectrum. A major reason the T-Mobile–Sprint merger deal has taken so long to conclude is antitrust concerns.

Antitrust regulators—particularly those in the US Department of Justice—don’t want to reduce the amount of competition in the US wireless market. Therefore, antitrust regulators want T-Mobile and Sprint to help groom a strong rival before they can merge. But as the Wall Street Journal reported, T-Mobile dislikes the idea of grooming a strong competitor. A report from Reuters says that the Department of Justice has given T-Mobile and Sprint an ultimatum on divesting assets.

Dish Network (DISH) is the front-runner in the race to purchase the assets T-Mobile and Sprint divest. Dish would use those assets to form a new wireless business. That goal is to preserve competition in the wireless market after T-Mobile and Sprint combine. But the Wall Street Journal report cited above stated that T-Mobile is plotting to ensure Dish doesn’t become too powerful.

T-Mobile and its parent Deutsche Telekom want to block Dish from teaming up with deep-pocketed investors in its wireless venture. Doing so would limit Dish’s funding options and ensure that it doesn’t become a strong wireless competitor quickly.

Wealthy corporations show interest in backing Dish’s wireless bid

Amazon (AMZN) has also shown interest in purchasing T-Mobile–Sprint assets, Reuters reported. Google has also explored backing Dish’s bid for the T-Mobile–Sprint assets, according to a report from the New York Post.

Amazon and Google have deep pockets. Amazon finished the first quarter with $23.5 billion in its cash reserve. Google parent Alphabet (GOOGL) closed the first quarter with $113.5 billion in its cash reserve. The wireless assets T-Mobile and Sprint want to divest could cost around $6.0 billion, according to Bloomberg.

Therefore, Amazon and Google could easily back Dish in its bid to purchase T-Mobile–Sprint assets. Amazon and Google could help create a powerful wireless provider that would be a huge threat to T-Mobile, which is why T-Mobile is seeking to prevent Dish from forming a strong wireless alliance. The main reason T-Mobile and Sprint are seeking to join forces is to form a stronger wireless provider. The goal is to compete more effectively with market leaders such as AT&T. But a strong Dish wireless business could distort the plans T-Mobile and Sprint have for after they merge.

As T-Mobile struggles to save its Sprint deal, it isn’t allowing any distractions to its nationwide 5G network goal. T-Mobile recently announced that it had achieved a milestone in its efforts to deploy 5G coverage across the US. Interest in 5G is so strong that Ericsson (ERIC) says it will be the most rapidly adopted mobile network technology. Ericsson predicts there will be 1.9 billion 5G subscribers worldwide by 2024.

What’s the Cost of the T-Mobile–Sprint Merger Delay?

T-Mobile seeking fast lane for nationwide 5G deployment

Last year, T-Mobile signed Nokia and Ericsson to supply it with 5G kits and related software. Last month, T-Mobile began offering 5G services in select cities. The company’s goal is to reach everyone in the US with 5G by the end of 2020.

At the moment, T-Mobile is making independent efforts to develop a nationwide 5G network. However, it believes that joining forces with Sprint will help accelerate its 5G deployment. Sprint has spectrum that T-Mobile could combine with its own to speed up its nationwide 5G rollout.

T-Mobile has committed to investing as much as $40 billion in expanding and upgrading its network. However, T-Mobile has conditioned this network investment on regulators approving the Sprint merger.

T-Mobile is counting on 5G to enable it to boost its existing revenue sources and open new revenue streams. Since 5G delivers significantly faster speeds, it will boost the uptake of mobile video streaming. In turn, mobile video streaming could create more demand for mobile data plans that operators such as T-Mobile sell.

Also, 5G will fuel the adoption of IoT (Internet-of-Things) technology, creating an opening for wireless operators to win more business from enterprise customers. A 5G-enabled IoT market could be worth $694 million in 2020, according to estimates by Research and Markets. The market could grow to $6.3 billion by 2025.

T-Mobile ventures into the asset-tracking business

In an apparent attempt to make the most of the opportunities 5G brings, T-Mobile has now ventured into the asset-tracking business. The company has partnered with Roambee to launch asset-tracking solutions. In doing so, it’s opened up a new revenue source. T-Mobile’s asset-tracking solution costs $10 per device, per month.

What’s the Cost of the T-Mobile–Sprint Merger Delay?

T-Mobile generated $11.1 billion in revenue in the first quarter, representing an increase of 6.0% YoY. Revenue rose 4.4% YoY at Sprint in the quarter. If the T-Mobile–Sprint merger succeeds, the resulting company will have more firepower to grow faster.

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