T-Mobile Sprint merger will be approved with conditions

Reading the tea leaves so far, I predict the T-Mobile and Sprint merger will be approved but may have several conditions. Let’s take a look at why this merger must happen for both companies to remain competitive in the coming world of 5G.

sprint t mobile merger 2018 cell phone service
Getty Images/Sprint/T-Mobile

I’ve been following the T-Mobile Sprint merger story for many years. If I were a betting man, I would say this merger will be approved, with conditions. Let’s take a closer look at why and what we can expect going forward for T-Mobile, Sprint, their opponents and the larger wireless marketplace.

First, with or without a merger, the wireless industry will continue to grow rapidly and thrive in the new world of 5G. The merger will only impact T-Mobile and Sprint and their ability to be competitive in this new world.

Second, I have been reading so much push-back from the opposition. While there is plenty, this is really nothing new or different from any other M&A story. The arguments made by opponents seem to be serious, but they only tell part of the story. In my opinion they are not enough to block a merger.

Job loss plays a role in any merger. So, this is nothing new. We have seen so many mergers over time and they all have the same factors. However, in wireless, as the industry changes, the competitors must change as well in order to protect their own interests. That means protect all their workers and stay on the growth wave.

While job loss created by a merger can be painful to the workers who are cut, this has been happening with every merger over time. If T-Mobile and Sprint do not merge, we will still see job loss.

Where T-Mobile and Sprint are on the wireless industry growth wave

The only difference is whether the company stays on the growth side of the growth wave or moves to the falling side of that same wave.

As the industry continues to change, so does the needs of every company. Companies can’t sit still. If they do, they miss the moving growth wave and get left behind. They must continue to grow and change and stay with the growth wave. If not, the industry-wide growth wave will move on without them, leaving them behind.

Think of the growth wave or growth curve. Companies and industries are either on the growth side, cresting or the falling side. In order for companies to continue growing and being healthy, they must stay on the growth side. If not, they are on the falling side and things start to fall apart.

That’s when real trouble enters the picture. When a company is on the falling side of the growth wave, jobs are lost. Earnings increases are cut. Stock value is lost. On the falling side, everything and everyone suffers. It’s very difficult to recover from this move.

It might be perfect if only we could wave our magic wand and say both T-Mobile and Sprint would stay just like they are. But we can’t. The marketplace continues to grow and to change. We’ve seen this same issue impact every industry and every company over time.

Some companies handle the transformation well and win long term. Others don’t and lose. Even go out of business. We have seen countless examples in each category over time.

So, we cannot expect them to stay put on the growth wave. Their choice is simple, either stick with the growth wave and move to 5G or move to the falling side of the wave and suffer the consequences.

It’s really that simple.

Wireless industry growth wave is changing with 5G

Everything always changes. It’s not like if we denied the merger things would stay the same as they are today. They wouldn’t. As the wireless industry moves rapidly to 5G, both AT&T Mobility and Verizon Wireless are well positioned to evolve.

T-Mobile and Sprint are not in the same kind of shape. While they are competitors in 4G, as we move into the capital-intensive world of transitioning to 5G, both T-Mobile and Sprint are better together than apart.

Without a merger, if kept apart, there would be strain on T-Mobile. They need more spectrum. As for Sprint, I don’t know whether they even have the ability to transform without a merger. They have spectrum but miss the magic ability to market well and grow.

Today, T-Mobile has the marketing and Sprint has the wireless data spectrum. Together they are a much stronger competitor as we move further into the new world of 5G. Separate they are two weaker competitors.

The choice whether to approve or deny T-Mobile Sprint merger seems simple

So, today regulators have a choice. Do we look forward or backward? Yesterday is the world of 4G and these companies can continue without merger. Tomorrow is the world of 5G and they will not be able to compete as successfully as they are today.

If T-Mobile and Sprint don’t merge, we will have four competitors, two strong and two weak. If they do merge, we will have three strong competitors in 5G. That’s the choice.

I know we’d rather have four competitors, but that’s in a perfect world. That was in yesterday’s marketplace. That’s if things stayed the same and no one lost their job or lost money in the stock.

However, we don’t live in a perfect world. The marketplace is always changing and growing. 5G is coming on strong and in this world, T-Mobile needs more spectrum and Sprint needs marketing ability to win market share. They need this to be able to successfully compete with AT&T Mobility and Verizon Wireless.

The only answer is to let T-Mobile and Sprint merge

That’s why I think the only answer is to let T-Mobile and Sprint merge. There can always be conditions put on this merger if there are real and unique concerns.

Unfortunately, job loss is part of life, with or without a merger as we move into the new 5G world. Always has been and always will be. Things change. Industries change. That means there will be mergers and there will be job loss. It’s not fair to the worker, but that’s what keeps the company’s strong and healthy and growing. It’s just the way things are.

Bottom line, if we don’t keep up with the change wave, it will move on ahead without us, leaving us behind in the dust. I don’t know about you, but that does not sound like a good plan for anyone, workers, executives, investors or the industry as a whole.

Copyright © 2018 IDG Communications, Inc.

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