A combined T-Mobile and Sprint will lower costs for consumers and accelerate the development of fifth-generation wireless technology, the companies argued in a request this week for the Federal Communications Commission to approve their merger.
The two firms are doubling down on broadband as other Internet providers push into the content industry through acquisitions. A federal judge recently approved a $85 billion deal between AT&T and Time Warner, while Comcast submitted a counter-offer for 21st Century Fox assets that Disney had agreed to buy.
[Also read: AT&T’s victory in Time Warner merger clears way for deal bonanza]
T-Mobile and Sprint say their combination, which is also under review by the Justice Department’s antitrust division, will force competitors like AT&T and Verizon Wireless to lower their prices. They argue the merger will also allow the new company to invest heavily in creating the infrastructure to support faster internet speeds; the companies previously committed to spending $40 billion on 5G networks over the next three years.
“The combination of the two companies will generate enormous cost savings,” including about $43.6 billion from combined operations and staffs, the firms said, and enable them to compete more effectively with larger rivals.
In the filing, Sprint says its share in the mobile wireless service dropped to 13.4 percent in 2016, down from 15.5 percent in 2013.
“Sprint’s loss of subscribers has steadily dwindled the base of customers across which it could distribute costs, exacerbating its scale disadvantages compared to larger competitors,” according to the filing.
Sprint said its “historically poor perceived network performance and other challenges” have resulted in customer churn that will make it difficult to “attract and retain customers as a standalone company.” Service revenue at the Overland Park, Kan.-based provider dropped 25 percent in the past five years, and it currently has $32 billion in debt, which Sprint says makes it “the most highly leveraged company in the S&P 500.”
T-Mobile had a 15.4 percent of the mobile wireless market in 2016 and currently serves roughly 72.6 million customers.
