T-Mobile/Sprint Merger: Enterprise Impact

Making Sense Of It All After One Year



Steven Lerner
05/30/2019

It’s been more than a year since the $26.5 billion merger deal between T-Mobile and Sprint was announced back in April 2018. When the deal was revealed, there was talk about how having a combined company would accelerate the growth of 5G in the enterprise.

In the past year, the deal has been seemingly bounced around as Federal regulators decided on its fate. Regulatory hurdle after regulatory hurdle appeared to sink the deal, especially since the FCC requested additional time to review it.

Then, on May 20, FCC Chairman Ajit Pai endorsed the deal, citing the, “unique opportunity to speed up the deployment of 5G throughout the United States.

The endorsement means that the FCC is likely to approve the deal soon. Of course, the deal still requires the approval of the U.S. Department of Justice, which could choose to block the deal from being finalized. There’s even a report that top officials at the DOJ want T-Mobile and Sprint to create a new rival company as a condition to approving the merger. Meanwhile, several state attorney generals could challenge the deal in courts, preventing it from being finalized.

This back and forth news is likely to serve as a headache for enterprise mobility leaders who are simply trying to determine the potential impact of a merger. To help make sense of it all, here’s the best case scenario and the worst case scenario.

Best Case Scenario Of The Merger

Putting on a pair of rose colored glasses, it appears the T-Mobile/Sprint deal has the potential to be beneficial for enterprises. As of part of Pai’s endorsement of the merger, there were a few stipulations.

First, T-Mobile and Sprint would have to offer the same prices or lower prices for the next three years. This could easily happen, because the potential merger would yield over $5 billion in cost savings, which could result in lower prices for cellular plans. In turn, this could force other carriers, such as Verizon and AT&T, to lower some plans in order to stay competitive.

Overall, lower prices could be beneficial for organizations that offer corporate-owned personally-enabled (COPE) plans to workers. Large enterprises could access plans with special discounted pricing, including some plans with unlimited data.

Second, according to Pai’s stipulation, the new mega-company must promise to deploy a 5G network covering 97% of the population in three years, and 98% in six years. Reports have indicated that the merger will allow T-Mobile and Sprint to increase 5G network capacity, and it would allow them to deploy 5G networks at a faster pace.

A more accelerated 5G network would be a boon for enterprises. Organizations would benefit from faster speeds on networks and reduced latency issues. Internet of Things (IoT) devices in particular could be more helpful with a faster network. 5G could help remote and field service workers be more productive. Several industries will also benefit from 5G.

Worst Case Scenario Of The Merger

Caveat emptor: Although a T-Mobile/Sprint merger has benefits, it’s all hypothetical. In fact, the stipulations that Pai announced are vey speculative and would be impossible to enforce. The current merger does not even detail a plan to meet the 5G stipulations.

As for the low prices, it’s only a 3-year guarantee. With one less major wireless carrier, the less-competitive market could see price increases in the long-term.

“I’ve yet to see a situation where fewer competitors makes for a more competitive market,” Bill Menezes, a senior principal analyst at Gartner, told Yahoo. “So any claims that competition will be the same as it was before because of some short-term price guarantee, are, let’s say ‘fluid’ at best.”

If cellular prices increased because of the merger, it could force some enterprises to shift to bring your own device (BYOD) policies, where the prices of the wireless plans get passed onto employees.

Finally, if the merger fell apart (which could happen), it would be devastating to both T-Mobile and Sprint, but especially Sprint, which has drastically lost its share in the enterprise market.

Hopefully, we will get some clarity on the potential T-Mobile/Sprint deal this year. Until then, enterprise mobility leaders can only wait.

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