Trump Presidency Revives Talk of T-Mobile, Sprint Merger

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The wireless industry may soon feel the effects of the political earthquake reshaping power in Washington, as the likelihood of a T-Mobile, Sprint merger might have just increased thanks to the election of Republican Donald Trump, crn.com reports.

Trump’s administration is expected to have markedly different regulatory policies than that of the Obama administration, who squelched a potential merger of the two wireless giants in August, 2014. “Four national wireless providers is good for American consumers,” current FCC Chairman Tom Wheeler said in a 2014 article published by the Wall Street Journal.
Wheeler is expected to step down following Trump’s inauguration, and could potentially be replaced by Jeffrey Eisenach, the telecom consultant who is currently heading up the selection of new FCC members on Trump’s transition team, Inside Towers has reported.  

“We think Sprint and T-Mobile are more likely than not to reconsider a merger scenario, but the (TV spectrum) auction, other strategic options, and regulatory complexities may slow down any attempt during 2017,” Citigroup analyst Michael Rollins said in a research report in investors.com.


Eisenach has been critical of Wheeler’s policies in the past, including net neutrality, and analysts have said they expect a much friendlier regulatory climate for large-scale mergers under a Trump administration. “I think we are going to see even more mega telecom mergers go through in an environment that doesn’t believe in regulation,” Natasha Royer Coons, managing director of TeraNova Consulting Group, recently told crn.com. “I think that laissez-faire attitude is certainly reflected in Trump’s transition team.”

Indeed, both Sprint and T-Mobile’s stocks rose the day following Trump’s election – Sprint’s by 12 percent and T-Mobile’s by 3 percent.

As recently as August, Sprint CEO Marcelo Claure expressed interest in a potential merger with T-Mobile. “We’ve always said that we were interested,” Claure told Fortune. “It would be nice to combine both companies to give us scale. Today that is a wish.”

Respectively, Sprint and T-Mobile are the third and fourth largest wireless providers in the U.S, reports crn.com. Opponents of the merger, like the Obama administration and FCC Chairman Wheeler, say the consolidation of two major carriers would have a detrimental effect on consumers and industry competition.

But others in the industry dispute that. Coons said the merger might even have a positive effect if it increases the quality of services provided for consumers.  


“I do like competition. I think it keeps companies delivering high-quality services for great prices, [but] I’m not against mergers that make sense and provide a more seamless delivery of services,” she said.

Similarly, Peppertree Capital Management President Howard Mandel, whose private equity fund invests in several telecom infrastructure companies, told Inside Towers in August, that carrier consolidation may have a short term negative effect for tower companies, but would not greatly affect the industry going forward.

“In the long run…there will still be the same number of subscribers using dramatically increasing amounts of data, so carrier consolidation is not likely to materially limit network deployment,” he said.

November 18, 2016

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