Throughout 2019 T-Mobile and Sprint’s pending merger dominated headlines as the “will they, won’t they” dragged on longer than expected after state AGs sued to block the deal. While we still don’t know the final outcome of that decision, it tees up major changes for the wireless industry in 2020.
If the megamerger is approved, the New T-Mobile will spring on the scene, starting work on a flurry of commitments including its pledge to cover 97% of the U.S. population with 5G service within three years of the deal closing.
It could also mean accelerated 5G timelines for Verizon and AT&T. Speaking at an investor conference in December, American Tower SVP and treasurer of corporate finance Rod Smith said a New T-Mobile would change the look of the wireless industry.
“You’ll have three strong players instead of two very large players and then T-Mobile and Sprint a little bit smaller,” he said. “So that will be exciting.”
Smith noted that as T-Mobile rolls out its network it “will put pressure on the other two, AT&T and Verizon, to enhance their spending to keep up with their networks to roll out 5G a little bit quicker.”
If a New T-Mobile emerges, Dish Network is also poised to enter the wireless fray. Testifying at the T-Mobile/Sprint antitrust trial, Dish co-founder and Chairman Charlie Ergen reiterated that Dish would be able to compete with a combined Sprint/T-Mobile “from day one.”
If approved, Dish will enter the market with 9 million prepaid subscribers from Sprint, access to low- and mid-band spectrum, and coverage of 92-98% of the country through an MVNO agreement with T-Mobile. In addition to service through its MVNO, Ergen said Dish will launch a 5G network in one market in 2020.
Analysts at LightShed Partners believe Dish’s MVNO agreement with T-Mobile is even better than initially thought, after additional details emerged at the merger trial last week.
“The more we learn about Dish’s deal via testimony and exhibits at this trial, the more we have grown concerned about increased wireless competition in the United States,” wrote LightShed’s Walter Piecyk and Joe Galone, in a Dec. 19 note to investors.
This could also impact cable operators, like Charter, Comcast and Altice USA, which have all launched respective wireless service offerings after striking separate MVNO agreements with Verizon or Sprint.
LightShed wrote that if the deal is approved, “Cable could have a new and attractive wireless partner with Dish, based on the MVNO terms.”
Wall Street analysts at Wells Fargo wrote in a December note to investors that they “increasingly believe 2020 will be THE year when cables’ wireless strategy’s rubber meets the road.”
This includes whether to own spectrum to help lower MVNO costs. Charter has been vocal about its interest in C-band through formal comments and has been testing dual-SIM capabilities with CBRS spectrum, both of which could be up for auction next year. However, the cable operator has indicated it’s “looking at all angles,” the firm noted.
Cable “seemingly finds itself at the fork of this road right now....the key question is which side of the fork does it follow,” added the Wells Fargo team led by Jennifer Fritzsche, adding that Charter may be the one to be the first down whichever path that is.
And if state AGs are successful in their effort to block the T-Mobile/Sprint merger? Exactly what will happen remains to be seen as there will still be four major wireless carriers, but a financially weakened Sprint, and T-Mobile, unable to get its hands on valuable 2.5 GHz spectrum, will have to, as executives said last month, fall back to its standalone strategy and look into the marketplace for “other opportunities for spectrum.”