If the proposed merger isn’t anticompetitive, why make that promise, analyst wonders
After the $26 billion proposed merger between T-Mobile US and Sprint was stalled due to the government shutdown, T-Mo CEO John Legere, who has been tapped to lead the combined company–the New T-Mobile–assured U.S. Federal Communications Commissioner Chairman Ajit Pai that the merger won’t result in higher consumer prices.
In a Feb. 4 letter to Pai, Legere wrote, “I want to reiterate, unequivocally, that New T-Mobile rates are NOT going to go up. Rather, our merger will ensure that American consumers will pay less and get more.”
Legere, who helms a carrier with a market cap of more than $56 billion, apparently sees the so-called “Un-carrier” as fundamentally different from rivals like AT&T and Verizon based on the language he used to describe opponents of the deal.
From the letter: “Critics of our merger, largely employed by Big Telco and Big Cable, have principally argued that we are going to raise rates right after the merger closes…We are the Un-carrier. If we broke faith by raising rates and cutting back benefits, we would lose our loyal customers and destroy the future of our brand. I want to assure you that we would never do this.”
In addition to the consumer impact piece, T-Mobile is also trying to get support for the deal by focusing in on U.S. leadership in 5G and job creation.
To the former, Legere wrote, “I am very confident about what the New T-Mobile will do to ensure the United States is No. 1 in 5G. All of us at T-Mobile and Sprint are particularly pleased that our merger has completed national security review and that Team Telecom has notified the Commission that it has no objection to grant of our transaction.”
To the latter, the operator says the combined company could create 5,600 new jobs at five proposed “customer experience centers.” T-Mo has identified Overland Park, Kansas, where Sprint is headquartered, and Rochester, New York, as potential locations for the new facilities.
Back to the consumer impact piece, New Street Research sees Legere’s assurances that rates won’t go up as indicative of regulatory concerns. As Seeking Alpha summarized it: ” If the deal doesn’t harm competition as T-Mobile and Sprint are arguing, why make the pledge?”
