Sprint-T-Mobile Puts No Immediate 'Substantial Competitive Pressure' on Verizon, AT&T

By Kelly Teal Comments
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**Editor's Note: Which is America's top wireless network? Click here to see what we discovered. Or click here for a recap of the biggest communications mergers in Q2 2014.**

Analysts at investment bank FBR & Co. say it’ll take a while before the as-yet-unannounced, $32 billion Sprint-T-Mobile merger poses a threat to rivals Verizon and AT&T.

In a July 24 client memo, David Dixon and Mike He cite one key reason: Integration.

If the Sprint-T-Mobile deal comes about, the time frame required to bring together each organization’s systems, processes, infrastructure and people stands to slow down the combined company’s ability to compete with Verizon and AT&T.

“If Sprint and T-Mobile merge as we anticipate, integration activity will be substantial in order to better position this asset with consistency from improved coverage and capacity," Dixon and he said. “Until the combined asset becomes an effective substitute to Verizon and AT&T in the high-end postpaid and enterprise segment, we would not expect substantial competitive pressure on the two larger incumbents in market segments where they currently enjoy an effective duopoly today."

Both Sprint and T-Mobile have large, lower-end consumer prepaid bases; these tend to be comprised of people concerned about costs. For its part, T-Mobile has been making bold moves to attract its competitors’ customers, such as rolling out plans with no annual contract, paying other carriers’ early termination fees, and offering unlimited data access, among other strategies. The company also recently launched its channel partner program targeting business clients. Sprint has had an indirect channel initiative for some time.

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