Clutch Your Coins: T-Mobile is Rallying Support for Sprint Merger

By CultureBanx Team

  • T- Mobile & Sprint control 54% of the pre-paid U.S.market
  • 15% of Sprint users and 14% of T-Mobile users are black

Telecom giant T-Mobile (TMUS +0.60%) plans to persuade regulators to approve its pending $26 billion merger with Sprint (S +0.33%), by leveraging smaller carriers that use its network. This would leave the U.S. wireless market dominated by three national players instead of four and, perhaps leave budget conscious consumers with higher prices and fewer options.

Why This Matters: T-Mobile and Sprint sell their airwaves to smaller wireless carriers that primarily operate in the pre-paid space and also serve low-income and minority customers. Currently T-Mobile has 38% of the U.S. pre-paid market, while Sprint has 16%, according to S&P. Nielsen’s Digital Media Vice President Jerry Rocha found that 15% of Sprint users and 14% of T-Mobile users are black.

Reuters reported T-Mobile wants these smaller carriers known as mobile virtual network operators (MVNOs) to help seal the deal. They want them to issue public statements or even write newspaper editorials, to help convince antitrust regulators this acquisition is a good idea.

Consumer advocates have warned the combined company would raise fees for pre-paid and other low-cost mobile phone plans, which Sprint and T-Mobile had previously been driving down. 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.

Situational Awareness: Low cost options are unlikely to remain with the market dominance this deal would bring about. However, customers could see coverage and data speeds improve. For T-Mobile and Sprint they hope the deal will successfully close in early 2019.

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