After years of negotiations, the major wireless carriers Sprint and T-Mobile announced a massive merger on Sunday (April 29), but a Texas Tech University economics expert says it’s not a done deal yet.
The merger would combine the third- and fourth-largest wireless service providers in the nation. Based on their last closing prices, Sprint is valued at $26 billion and T-Mobile is valued at $55 billion.
Michael Noel, an assistant professor in the Department of Economics, specializes in industrial organizations. He has consulted for both private firms and governments in high-profile merger and antitrust law matters around the globe. Noel also has conducted analyses relating to price fixing, collective dominance, coordinated behaviors, mergers and regulation in a variety of industries including oil and gas, supermarkets, managed health care, pharmaceuticals, packaged software, payment cards, book publishing, online search, communications and auto manufacturing.
- The merger has a significant chance of being quashed by regulators.
- The merger would take the current number of national carriers from four to three, while T-Mobile claims the more correct number for competitive analysis is six to eight. It would replace the third- and fourth-largest firms with the second, above AT&T and below Verizon.
- One concern is likely to be that T-Mobile, sometimes considered a “maverick” firm whose low prices and aggressive offerings have applied downward pressure on the industry generally, may change its pricing focus with the acquisition of Sprint. T-Mobile claims the merger will decrease prices but is short on specifics.
- The potential advantage to consumers is a bigger, greater T-Mobile/Sprint network that would allow T-Mobile to better compete on quality and be better able to develop a competing 5G network.
- The merger has significant similarities to the proposed DirecTV-Dish Network merger that failed to pass regulatory approval 15 years ago.