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Analysts: Sprint/T-Mobile must merge or one will fail

2014-04-14 10:03 by
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Sprint and T-Mobile merger has been in talks for quite some time. According to a recent analysis from New Street Research, Sprint and T- Mobile US need to merge to effectively compete against AT&T Mobility and Verizon Wireless, because one of the companies will ultimately fail if they are not able to merge.

Although Sprint and T-Mobile are national telecom players, they are far behind Verizon and AT&T. Neither of them would be able to contend with the likes of their bigger rivals in isolation. The only solution for the two is to join forces and emerge as a stronger player that would effectively compete with the Big Red and the Dallas carrier, instead of giving namesake competition.

"Our analysis shows that neither Sprint nor TMUS have enough revenue to cover their fixed costs and it is highly unlikely that both will capture enough new revenue to do so," the analysts wrote, pointing out that they believe Sprint and T-Mobile need to raise an additional $10 billion in the next 18 months to remain competitive, an effort that could be stymied by market conditions. "Both companies aren't independently viable at the same time. We show that there simply isn't enough revenue in the industry for four carriers to cover their fixed costs unless there is a significant shift in market share."

However, New Street Research said that, if Sprint and T-Mobile attempted a merger today, regulators at the FCC and Department of Justice would move to prevent the transaction.

Read more -here-


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