Jun 5, 2014
Earlier this morning, reports of Sprint Corp S.N preparing to purchase T-Mobile US Inc. flooded the Internet. It was reported that Sprint has agreed to pay roughly $40 per share to buy T-Mobile, which would merge the third and fourth-biggest U.S. mobile networks.
Sprint and T-Mobile have long competed with America’s #1 and #2 mobile networks, AT&T Inc. and Verizon Communications Inc. A deal to combine Sprint and T-Mobile would allow the smaller companies to more vie for the #1 spot.
The proposed merging of companies, however, brings up regulatory concerns. Paritosh Bansal and Harro Ten Wolde, the authors of the Reuters. com article, “Spring agrees to pay about $32 billion to buy T-Mobile: source,” wrote:
“Analysts see the regulatory challenge as the biggest hurdle facing the companies since both the U.S. Federal Communications Commission (FCC) and Department of Justice (DOJ) have expressed a desire to have at least two more network operators competing against the market leaders AT&T T.N and Verizon VZ.N.”
According to a Bloomberg.com article, a deal between Sprint and T-Mobile would have a 30 to 40 percent chance of winning regulatory approval.
The companies will continue to negotiate terms and possibly ready a merging deal by late July or early August. If the deal is approved, Sprint and T-Mobile management would need to determine who would ultimately “run” the company and make decisions, which phones would be used, how customer service would operate, whose coverage and towers would dominate, etc. The new mobile network would require a new face, logo, and brand—and would need to market its image in a way that would make customers understand the merge and trust the new organization.
Photo Courtesy of Mike Mozart and Creative Commons.