The old saying goes, you have to break an egg to make an omelette. If Sprint and T-Mobile want to whip up a merger, they may have to sell off a profitable but politically sensitive part of their respective businesses: pre-paid subscription, reported Bloomberg.
Together, T-Mobile’s Metro brand and Sprint’s Boost and Virgin Mobile brands make up the largest segment of the U.S. pay-as-you-go market, with about 42 percent, according to Bloomberg.
The selling of assets to accommodate a merger suggests that the carriers are anticipating pushback from the Justice Department’s antitrust division and the FCC, which both have to sign off on the transaction.
The federal overseers of a potential merger have expressed concern it will hurt wireless competition. Specifically, worry surrounds the idea that a consolidated, three-carrier market would harm low-income customers, the predominant users of pay-as-you-go wireless plans, with little or no access to credit by reducing choices and raising prices.
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May 15, 2019