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Following a report released last month that Department of Justice staff members reportedly told T-Mobile and Sprint that it was unlikely that their merger would be approved because it was structured, a new rumor indicates that the two carriers are planning to make concessions to improve their chances of approval.
T-Mobile and Sprint would have weighed a few different deal options. Sources talking to Bloomberg One of the main concessions envisaged is the separation and possible sale of their prepaid activities. Other options considered include the sale of certain spectrum licenses or the creation of a fourth operator through a network lease, although T-Mo and Sprint consider these options less attractive.
The combination of T-Mobile's Metro, Boost Mobile and Virgin Mobile would give T-Mo about 42% of the prepaid market, making it the most important piece. The sale of T-Mobile's and Sprint's prepaid activities could increase the likelihood of approval of their merger, with some fearing that the deal will hurt low-income consumers by reducing their carrier choices and eventually increasing their prices.
Peter Adderton, founder of Boost Mobile, launched the idea of disinvesting prepaid services last year after the announcement of the merger proposed by T-Mobile and Sprint. He stated that the transaction should only be allowed if Boost and / or Metro are split, suggesting that these brands compete aggressively for prepaid customers but that this competition may disappear if the merger is approved. "This level of market dominance almost always leads to higher prices, heavier conditions and lower quality of service," Adderton said of the deal. "Prepaid subscribers who are young and have credit problems just can not afford that."
The sale of some prepaid brands seems to be the most interesting option for T-Mobile and Sprint among the three mentioned in today's report. For example, one of the major aspects of the deal that T-Mo and Sprint pointed out is that their combined spectrum portfolio will allow them to build a national 5G network, and they will probably be reluctant to sell some of these waves. .
Source: Bloomberg
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