Ahead of a scheduled presentation in front of the Chamber of Commerce in Washington, D.C., Sprint and Softbank Chairman Masayoshi Son took to U.S. airwaves in claiming his desire to become a more disruptive force in the domestic telecom market, as well as his desire to do so with the help of T-Mobile US.
Appearing on an interview program with Charlie Rose, Son said he would like to acquire T-Mobile US, but that no formal agreement has been reached.
“We have to give it a shot,” Son said in response to a question as to whether such a deal can be made. “We would like to make a deal happen. But there are steps, details that we have to work out.”
It appears that the biggest step is in convincing regulators that a combination of the nation’s No. 3 and No. 4 carriers would not harm competition. Following AT&T’s unsuccessful attempt to acquire T-Mobile USA in 2011, regulators indicated that their preference was for the country to have four nationwide operators.
Son is arguing that the current model with two operators controlling a vast majority of the industry’s customers and profits and two smaller carriers barely able to scrape by is not a sustainable model.
“Here comes two little ones not able to fight with enough scale,” Son told Rose. “That’s no god and I think the situation needs to change.”
If a deal between the two were to happen, Son said he would begin an all-out price war against Verizon Wireless and AT&T Mobility in an attempt to gain market share, even if that price war impacted profits.
“I want to be No. 1,” Son said.
While regulators seem averse to such a deal happening, at least in the short term, T-Mobile US has left the possibility open. The carrier, which over the past 12 months has produced the price war Son said he would like to wage, has said it remains open to such an arrangement, though it added that it does not expect something to happen in the short term.
Son’s presentation, entitled “The promise of mobile Internet in driving American innovation, the economy and education,” is expected to focus on the broadband benefits a potential Sprint/T-Mobile US merger could provide, including providing an alternative to incumbent wireline broadband providers from the cable television and wireline telecommunications space. This could prove a compelling argument in the shadows of Comcast’s current attempt to acquire fellow cable provider Time Warner Cable.
Sprint, which has suffered through operational challenges linked to network issues, last October announced its Spark program that it said would be able to provide mobile broadband speeds in excess of 50 megabits per second. That offering is highly reliant on the carrier’s deep 2.5 GHz spectrum holdings.
The challenge for Sprint would be in convincing regulators that an acquisition of T-Mobile US would not stifle pricing competition, a challenge since T-Mobile US’ recent customer success seems to have come mostly at the expense of Sprint. Son will also have to make a case that Sprint needs T-Mobile US’ spectrum holdings to further bolster its network offerings, another challenge considering Sprint’s current network upgrades have languished while T-Mobile US seems to have been able to update its network at a much faster clip and with little disruption.
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