SoftBank CEO Masayoshi Son will not directly call for a merger between SoftBank-owned Sprint (NYSE:S) and T-Mobile US (NYSE:TMUS) in a speech in Washington on Tuesday, according to a Bloomberg report.
Instead, he will try to reframe the debate over U.S. wireless consolidation by arguing the benefits of an advanced wireless network that could widely deliver ultra-fast broadband access and improve education and mobile commerce.
The report, which cited unnamed sources familiar with the matter, said that Son will talk about new options for home broadband via wireless to compete against entrenched players, not just AT&T Mobility (NYSE:T) and Verizon (NYSE:VZ) but also MSOs like Comcast and Time Warner Cable, which are seeking to merge.
SoftBank declined to comment ahead of the speech, which Son will deliver at the Chamber of Commerce. It will be Son's first public speech to a U.S. audience since SoftBank's $21.6 billion deal to acquire around 80 percent of No. 3 U.S. carrier Sprint last year. SoftBank has said Son will discuss "the state of America's wireless communications industry and the competitive global landscape," according to an invitation sent to news outlets.
Son has pushed heavily for a deal between Sprint and T-Mobile, arguing that only through greater scale can Sprint compete effectively with Verizon and AT&T and bring more competition to the U.S. market. However, that argument has met with resistance from regulators at the FCC and Department of Justice, who are wary about consolidation among the Tier 1 carriers, especially ahead of forthcoming wireless spectrum auctions.
"In most markets you have one or two choices for broadband. SoftBank's strategy is to convince the FCC and DOJ that a strengthened No. 3 player can compete with cable," Wells Fargo analyst Jennifer Fritzsche told Bloomberg. "The key to this will be finding a way to make it politically palatable so it doesn't look like regulators are doing an about-face on the four-player market preference."
U.S. mobile consolidation is "inevitable given the predatory duopoly structure here in the U.S.," T-Mobile CFO Braxton Carter said at an investor conference last week. However, both he and Deutsche Telekom CEO Timotheus Hoettges also said last week that T-Mobile can operate as a standalone company and that T-Mobile's management is running the business with a long-term view. DT still owns 67 percent of T-Mobile.
Sprint, under Son, is trying to dramatically increase the speeds it delivers via its network through an initiative called Sprint Spark. The plan, announced in October, is a wireless service that will work via the combination of Sprint's 800 MHz, 1.9 GHz and 2.5 GHz LTE spectrum. The technology will combine Sprint's FDD-LTE network in its 800 MHz and 1.9 GHz spectrum and its planned TD-LTE network in its 2.5 GHz spectrum. Sprint intends to use carrier aggregation technology to implement Spark and deliver 50-60 Mbps speeds. Sprint plans to bring the technology to the top 100 U.S. markets within three years.
Sprint CEO Dan Hesse said in December that said Sprint could eventually offer real-world speeds of 150-180 Mbps via Spark.
However, that will not happen overnight. While Spark is available in parts of 14 markets right now, the 2.5 GHz deployment as part of Spark uses radios that have capabilities for 8 Transmitters 8 Receivers (8T8R). Sprint won't start deploying those radios in earnest until mid-year.
- see this Bloomberg article
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