T-Mobile stokes optimism for Sprint merger during earnings call

T-Mobile remains confident that its proposed merger with Sprint will receive regulatory approval in the first half of this year. (Monica Alleven/FierceWireless)

T-Mobile tried to stoke optimism for its proposed merger with Sprint during its earnings call Thursday. “We remain optimistic and confident that once regulators review all the facts, they will recognize the significant pro-consumer and pro-competitive benefits of this combination,” CEO John Legere said during the call.

He compared the process to a “a game that is pretty clearly if not in the bottom of the ninth inning, it’s in the late innings.”

T-Mobile posted preliminary results for Q4 2018 last month and the final results for the end-of-year quarter remain unchanged. The nation’s third-largest carrier added 2.4 million total net customers during the quarter and brought its total customer base to 79.7 million at the end of 2018.

The company also banked $640 million in net income on $11.4 billion in total revenues. Revenues were up 6% from the year-ago quarter and up 7% on an annualized year-over-year basis, but net income was down 76% from Q4 2017 and down 36% from the year-end total for 2017.

As previously noted, T-Mobile’s branded postpaid phone churn came in at 0.99% during the quarter. “The first time ever that T-Mobile’s churn was lower than AT&T’s—a major milestone for both of us,” Legere said.

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With little news to share on the earnings front, the prospects for T-Mobile’s merger with Sprint was the predominant focal point during the call. “I am very pleased with the progress we’ve made in our merger and the process so far, and I continue to expect regulatory approval in the first half of the year,” Legere said.

“The combined company will create an aggressive competitor in wireless, broadband and beyond, which will result in lower prices for consumers and will create jobs starting on day one. American consumers will benefit from a nationwide 5G network that is both broad and deep, and we can’t wait to get started,” he said.

From his perspective, “regulators are ignoring the noise and conducting a fact-based review.” He noted the merger has been approved by 15 of the required 19 state public utilities commissions and added that he and Sprint Executive Chairman Marcelo Claure look forward to speaking with lawmakers before a joint hearing on Capitol Hill next week.

“Critics of the merger, largely employed by big telco and big cable, have principally argued that we are going to raise rates right after the merger closes,” Legere said. “I want to reiterate unequivocally that prices will go down and customers will get more for less. We’re entering the final stages of our regulatory review process and it’s an important time to document the commitment we’ve made from day one.”

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When analysts pressed him on the pricing commitment, Legere said network capacity is one of the key differentiators for a combined T-Mobile and Sprint. “The core tenet of the New T-Mobile is that by bringing these companies together you get something very different from the T-Mobile you know today plus the Sprint you know today,” he said. “The combination has a multiplicative effect on the total available network capacity, and that’s very exciting because pricing in the industry is a function of your costs and it’s a function of your capacity. Our costs at New T-Mobile is going to go down dramatically when it comes to what it costs to produce a gigabyte of data.”

Most importantly, the merger with Sprint will enable T-Mobile to “break down this traditional trade-off that consumers have always been forced to make, which is: ‘Do you want a good deal or do you want the best network?’” he said. “The New T-Mobile will be uniquely positioned to give you both.”