Take Over Spirit: T-Mobile Looking To Merge With Comcast?

CBx Vibe:Big Deal” Kid Ink

By CultureBanx Team

  • T-Mobile weighed a potential merger with cable giant Comcast
  • 14% of T-Mobile users are black

Executives at T-Mobile (TMUS -0.53%) weighed a potential merger with Comcast (CMCSA -0.79%), the largest U.S. cable provider, once they seal the $26.5 billion Sprint deal. An internal document recently filed in Manhattan federal court challenging the latter deal showed that in 2015 bosses at Deutsche Telekom, T-Mobile’s majority owner, saw a merger with Comcast as unlikely to encounter significant regulatory barriers while resulting in cost and network synergies. The real concern is what happens to low-income budget conscious consumers as cord cutting rises, and the wireless market shrinks.

Why This Matters: Americans already pay some of the highest prices for wireless and fixed broadband among all developed nations, so less competition probably won’t fix that. The median household income for African Americans was just over $39,000 in 2016, putting black people directly in T-Mobile’s sweet spot among customers who make less than $75,000 per year. Nielsen’s Digital Media Vice President Jerry Rocha found 14% of T-Mobile users are black. If the T-Mobile and Sprint deal closes it could leave people stuck with higher prices and fewer options. Surely the same thing would be true if they teamed up with a cable company like Comcast.

If Comcast did acquire T-Mobile and Sprint, they could become a reseller to Spectrum Mobile and Altice Mobile

It’s important to note the cable industry looks very different than it did in 2015, when T-Mobile executives put the brief together. The internal document listed Comcast, Charter Communications (CHTR +0.82%), Bright House Networks, and Time Warner Cable as possible merger candidates. However the changing landscape puts this into question, because in 2016 Charter acquired Bright House and Time Warner Cable, now known as Spectrum.

Comcast has also re-entered the wireless space with its Xfinity Mobile, and really the entire cable television industry has entered the wireless market. Cable TV companies like Comcast act as mobile virtual network operators (MVNO), essentially wireless resellers. They do not own and operate their own wireless networks.

AT&T (T +0.51%), Verizon  (VZ -1.06%), T-Mobile, and Sprint each own their nationwide wireless network infrastructure and sell their excess capacity to other companies. Comcast’s Xfinity Mobile and Charter’s Spectrum Mobile both operate on Verizon’s network, while Altice USA’s (ATUS -0.89%) Altice Mobile uses Sprint and AT&T.

Situational Awareness: If Comcast did acquire T-Mobile and Sprint, they could become a reseller to Spectrum Mobile and Altice Mobile. On the other side of the token, T-Mobile has started to take on the cable companies at their own game by providing wireless home broadband and live TV services.

CBx Vibe:Big Deal” Kid Ink

CONTRIBUTOR

CultureBanx Team

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