By Alexandra Burlacu | Dec 14, 2013 08:33 AM EST
The U.S. has four major carriers, and two of them are reportedly discussing a merger: Sprint and T-Mobile.
Sprint is the nation's third largest carrier, while T-Mobile comes in fourth. According to a new report, Sprint is considering a potential bid for T-Mobile, which would lead to a merger of the two companies.
Citing "people familiar with the matter," The Wall Street Journal claims that Sprint is currently "studying regulatory concerns" and it could be ready to place a bid as soon as the first half of next year.
Sprint executives have reportedly been considering a merger with T-Mobile for several years, as the resulting company would be able to better compete against heavyweights AT&T and Verizon Wireless, the nation's two largest carriers. After a potential AT&T/T-Mobile merger failed to materialize, according to the WSJ, executives from both companies have stated that a merger should be allowed. Sprint, meanwhile, had been interested in a deal with T-Mobile even before the whole AT&T/T-Mobile merger fell through.
According to various previous reports, Sprint made an attempted bit for T-Mobile in 2010. AT&T then placed a $39 billion bid on T-Mobile in early 2011, prompting Sprint to file a federal lawsuit against both AT&T and T-Mobile to try and stop the deal from materializing. The Department of Justice (DOJ) later forced AT&T to pull out of the merger by filing an antitrust lawsuit against the deal.
At the time, regulators argued that such a merger between AT&T and T-Mobile would negatively affect competition across the U.S. Some might see a Sprint/T-Mobile merger as raising the same issue, with the same negative impact on competition for such services.
Sprint and T-Mobile executives reportedly argued, however, that only through such a merger the two companies would have a real chance to compete against the powerful AT&T and Verizon. AT&T's subscriber base is nearly 110 million, while Verizon has almost 120 million subscribers. Together, Sprint and T-Mobile have a combined user base of 53 million users. This means that even joining forces, Sprint and T-Mobile would still have about half of the subscriber base of AT&T or Verizon.
The purported merger between Sprint and T-Mobile is still in discussion and nothing is certain for now, which means that it may or may not materialize. Such a deal will definitely be tough to achieve, but it would significantly boost their relevance in competing with AT&T and Verizon. The stakes are high, but Sprint seems determined to see this through. Will we see a Sprint Mobile next year? A T-Sprint? Only time will tell.
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