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T-Mobile CEO: M&A Coming but Not Quite Yet

Dan Jones
2/14/2017
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T-Mobile's CEO wants you to know that rumors swirling about around M&A in the US communications scene are probably overblown right now, but that this will change in 2017.

CEO John Legere was directly asked on the operator's fourth-quarter earnings call about the potential for industry consolidation these days. Notably, there has been recent speculation about a reboot of an attempted merger between Sprint Corp. (NYSE: S) and T-Mobile US Inc. (See SoftBank's Son & Trump: Marriage of Expedience.)

Hold your horses there, financial analysts, said Legere.

"I have to color myself highly amused by the conversation that been taking place at the top of most people's list over the last month or two," he said. "I'll preface by saying that we're in an anti-collusion period during the low-band spectrum auction, so one thing I can assure you is that nobody is talking to anyone."

This will change in 2017 after the Federal Communications Commission (FCC) assigns the 600MHz licenses to the auction winners. This appears likely to happen in the next few months.

"I couldn't be more excited about the period that's just about to come up after this auction is over," Legere said.

Following another set of strong results, the CEO said that T-Mobile is a "healthy, growing franchise" that can drive shareholder value alone, or "participate in various forms of significantly growing this industry through consolidation."

Legere contrasted T-Mobile's position of strength with what he suggested could be more "panic" moves from rivals.

"Right now, you know that Dish needs to do something, regulatory-wise, they need to do something with their spectrum," Legere notes.

"Sprint is clearly playing the game for the next quarter, in that they've got good spectrum, but they don't have a franchise. They're a candidate for being a part of a greater organization, either through scale, or something else," Legere said.

Legere earlier slammed Sprint's earlier half-off offer pricing offer as "desperation," which is now exploding, according to the CEO. "It's fake price, on a network that doesn't work, with capex that's not being put into it," Legere said. (See Sprint Undercuts Rivals With Half-Price Offers.)

Legere expects the M&A atmosphere to lighten under the Trump administration. "There certainly is an expectation and an air of less regulation... corporate tax reductions, less impediment to... innovation," says Legere.

"We look forward to working with Chairman Pai... as well as the Trump administration in anything that's important in the telecoms space, Legere says.

— Dan Jones, Mobile Editor, Light Reading

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kq4ym
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kq4ym,
User Rank: Light Sabre
2/27/2017 | 8:57:52 AM
Re: On a Sprint/T-Mobile merger...
Interesting how as noted there are no merger thoughts with the current "anti-collusion period during the low-band spectrum auction," season. I wonder if that might be a future strategy by government to encourage or discourage M&A activity by announcing spectrum auctions?
mendyk
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mendyk,
User Rank: Light Sabre
2/17/2017 | 4:30:48 PM
Re: On a Sprint/T-Mobile merger...
But if capacity is an issue -- and it always is with mobile -- what's the benefit of mashing the two services together? Branding is one thing, and it can be addressed without changing the network infrastructure. Same with back-office stuff, although it's rare to find a merged operator that has been able to do that in a reasonable amount of time. A merger like this would be for combined market share rather than for economy of scale, no?
DanJones
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DanJones,
User Rank: Blogger
2/17/2017 | 4:24:20 PM
Re: On a Sprint/T-Mobile merger...
For how long? It's cheaper to combine on the device side for starters.
mendyk
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mendyk,
User Rank: Light Sabre
2/17/2017 | 2:16:20 PM
Re: On a Sprint/T-Mobile merger...
So why not run them separately, at least on the network side?
DanJones
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DanJones,
User Rank: Blogger
2/17/2017 | 1:22:27 PM
Re: On a Sprint/T-Mobile merger...
Yep, Sprint has 2.5, useful spectrum if you can make it work.
mendyk
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mendyk,
User Rank: Light Sabre
2/17/2017 | 9:26:06 AM
Re: On a Sprint/T-Mobile merger...
Dan -- Would the networks have to be combined?
DanJones
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DanJones,
User Rank: Blogger
2/16/2017 | 10:06:01 PM
Re: On a Sprint/T-Mobile merger...
Combining the networks will be BRUTAL though.
danielcawrey
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danielcawrey,
User Rank: Light Sabre
2/16/2017 | 6:57:49 PM
Re: On a Sprint/T-Mobile merger...
I think T-Mobile and Sprint really need to merge. Right now, there's AT&T and Verizon. Consumers need to have another option that is of the caliber of those two companies. This creates better pricing and improved service for everyone. We should have plentiful choice when it comes to wireless service. 
brooks7
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brooks7,
User Rank: Light Sabre
2/15/2017 | 5:04:18 PM
Re: On a Sprint/T-Mobile merger...
I would say that Centurylink or Frontier need to be added to that list.

seven
tyrellcorp
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tyrellcorp,
User Rank: Light Beer
2/15/2017 | 3:48:03 PM
Re: On a Sprint/T-Mobile merger...
Yeah mentioned CableCos in my first message.  That would be better for consumers than Sprint/TMO combined.
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