T-Mobile's Legere: A merger with Sprint would help fight 'duopoly'

T-Mobile US (NYSE:TMUS) CEO John Legere once again did not rule out the possibility of a merger with No. 3 carrier Sprint (NYSE:S), saying such a combination would allow the companies to better compete with what he called the "duopoly" of Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T).

john legere tmobile


Rumors have been swirling recently that a deal between Sprint and T-Mobile might be growing more imminent. Sprint parent SoftBank has engaged in direct talks with T-Mobile parent Deutsche Telekom to try to iron out a deal between Sprint and T-Mobile, according to a recent Bloomberg report. Earlier this month the Wall Street Journal reported that at least two banks have provided Sprint with proposals for financing a takeover of T-Mobile.

Legere, in a televised interview with Bloomberg's "Bloomberg West" program, said that all wireless carriers need more spectrum and that there are "multiple paths" for success for T-Mobile. One option, he said, is to ensure that Verizon and AT&T do not grab the majority of spectrum below 1 GHz via next year's incentive auctions of 600 MHz broadcast TV spectrum.

"If the government wants us to have a competitive environment, you are going to make sure that the duopoly doesn't use their prowess to crush the little guys and have this sub-1 GHz spectrum be moved all to them," he said.

However, Legere also added that there are "multiple versions of consolidation in the industry that are possible ways for us to grow." He said "from a standpoint of companies consolidating to get better scale, I'm open to looking at options."

"We're all going to need better scale and capability," he said. "The question starts to be: How do you take the maverick and supercharge it? We either need more spectrum and capability, a lot more investment, or we need consolidation."

That echoes comments Legere made at the Consumer Electronics Show earlier this month in which he said "the T-Mobile brand, attitude, and identity is here to stay." He added then: "What we're doing, in any [acquisition] scenario, will prevail."

Any deal between Sprint and T-Mobile would face an uphill battle with regulators, analysts have said. Regulators at both the FCC and Department of Justice have indicated that they would prefer to maintain four national operators. T-Mobile seems to have revived itself with lower pricing, aggressive "uncarrier" marketing and plans to pay customers $650 to cover their early termination fees if they switch and trade in their devices, for example. Further, it seems unlikely the FCC would bless a merger that would reshape the industry before crucial spectrum auctions scheduled to start next year.

For more:
- see this Bloomberg article
- see this Kansas City Business Journal article
- see this Dallas Morning News article

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