T-Mobile is Trying to Win an Election with the Sprint Merger

Where do I begin?

Well, now that I’ve started with that sentence - I can comfortably segue into any dimension of this incredibly interesting merger.

T-Mobile and Sprint have announced plans to merge - the board of directors for both companies approved the move, along with their parent companies (Softbank and Deutsche Telekom).

There are a few things that you need to know and a few things that you should think about.

The US is famous for its two-party system. There is virtually no other choice, and you could call the congressional mechanism a duopoly, for a lack of a better term.

But wait - there’s the Libertarian party and the Green party. We have choices!

Well, not really - take a look at who occupies Senate seats and House seats and unfortunately, the duopoly reality becomes evident.

This becomes all the more interesting when you also realize that around 42% of all Americans identify themselves as independents - not favoring Democrats, or Republicans. We’ll call this bunch the Famous 42 for the remainder of this read.

If the Famous 42 reached a point of intense dissatisfaction with the current 2-party system, and could somehow rally together behind a common theme - they could theoretically have enough clout to disrupt the “industry” forever.

Of course, easier said than done - being independent is a vague term (it literally encompasses everything under the sun that isn’t strictly Democrat or Republican). And, not to mention, an excellent 3rd option has yet to be offered.

What if I were to tell you that John Legere was trying to unify all independents?

Let me explain (before you question my sanity).

To answer your first question, John Legere is the CEO of T-Mobile and has been since 2012. He’s been instrumental behind T-Mobile’s uncarrier campaigns, in which he spearheaded a movement of breaking away from the infamous 2-year contracts, and instead opting into a no-commitment, affordable plan, “made for the people”.

He’s brought T-Mobile from the 4th largest carrier in the US, to the 3rd largest carrier, by market share in the short span of 3 years.

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  • He’s brought no-contract plans.
  • He’s brought in rules like “what you see is what you pay” - no hidden fees.
  • He’s standardized no overages for extra data usage.
  • He’s brought in the biggest bang for your back - T-Mobile offers unlimited data, free Netflix, internet on airplanes, and free cell phone usage in 140 countries (yes, even free Netflix).

Why am I telling you all this?

John Legere is disrupting the industry, and he’s convinced an additional ~42 million US independents (who previously were reluctantly subscribing to the two-party system), since taking over as CEO to switch to his brand-new 3rd option.

Now that the metaphor is beginning to unravel, let’s break it down simply - People are dissatisfied with AT&T and Verizon (the aforementioned 2 parties that reap the benefits of industry stagnancy).

The option that isn’t available to Americans in the political system, is becoming more and more available in this field.

So why do John Legere and T-Mobile want to purchase a majority stake in Sprint?

The new combined spectrum

The new combined spectrum

Without going into the weeds of it, cellular frequencies in the United States have been sold to Verizon, AT&T, T-Mobile and Sprint. Every other “cellular provider” you see - Freedompop or Virgin Mobile or StraightTalk or whatever else, utilizes frequencies that actually belong to one of these big four.

If T-Mobile is able to utilize its low band, in combination with Sprint’s mid-band frequencies, a cheap 5G network for its customers becomes a more feasible idea.

Not only that, but over the course of a few years, the two debt-ridden companies could significantly cut down on expenses, maximize on synergies, and optimize revenue channels.

The merger would allow T-Mobile to build out a 5G network quicker than its competitors, and for the company to save cut down on its debt in a matter of years.

But think bigger - if you’re the first to roll out 5G, think about the customers that would make the switch. Think about the services you can offer when you have the fastest internet to offer your customers.

They’re thinking about disrupting the TV industry next - and this merger would give them the tools to do so.

T-Mobile could become the largest cellular, data, and TV provider in the game.

So why in the world would anyone be opposed to this?

Imagine if this were to be happening to the American political system - I'm sure you can imagine who would be against this. In this scenario the "hurdles" (for better, or for worse) are as follows:

For one, AT&T and Verizon are against this. Instead of dealing with a lackluster Sprint (which frankly isn’t innovating and is losing customers) and a disruptor who some might call crazy (John Legere) - they’d have to deal with a large telecom company that has a 30% market share, and cheaper plans.

For another, the FCC has to decide whether the merger is beneficial for all of us. Will costs truly stay low, or will customers just get screwed over? Where there used to be 4 options, will a reduction in options really be a good idea?

 

What do you think about the potential merger?
Good for your wallet? A future bank account drainer?