Sprint

What isn't clear right now is why Sprint needs to buy its closest competitor to start the war

It's not much of a secret that Sprint intends to make a bid for smaller rival T-Mobile, but SoftBank CEO and Sprint chairman Masayoshi Son is making big claims about what the combined companies would do. Speaking in an interview on PBS, Son claimed that if a deal to let Sprint buy T-Mobile were agreed to and approved by U.S. regulators he would start a "massive price war" in the U.S. wireless market to challenge Verizon and AT&T.

"It's a three-heavyweight fight. If I can have a real fight, I go in a more massive price war, a technology war."

Said Son, who explained that the extra scale provided by combining Sprint and T-Mobile would create a best-case scenario for his company to change things in the U.S. He claims that he would be willing to postpone profits in order to gain market share and get closer to the two biggest players, Verizon and AT&T. At the same time, Son wants to make upgrades to the carrier's networks to provide faster internet speeds like you'd find in other advanced networks around the world.

Unfortunately for Son, U.S. regulators aren't too happy about the idea of a combined Sprint and T-Mobile regardless of what he may claim about future plans. The authorities which have the power to shut down any proposed merger haven't looked favorably on mergers of this size before (see: AT&T / T-Mobile) and don't show any intention of approving this one. At the same time, things aren't so cut-and-dry from Deutsche Telekom's point-of-view, which still owns a majority of the now-public T-Mobile U.S. The German carrier giant seems to have changed its position as of late, becoming more interested U.S. investment to grow subscribers with T-Mobile.

And at the highest level, it really isn't all that believable that things would change in any meaningful way after Sprint purchased T-Mobile. When it comes to dropping prices and increasing infrastructure spending, there's little Son could do after buying T-Mobile that he couldn't simply do with just Sprint right now. Nothing is stopping Sprint from getting competitive against the likes of T-Mobile — and increasingly, AT&T — by lowering prices, and the carrier has been tooting its horn about the Network Vision and Sprint Spark improvements for years now.

These are changes that could be happening now, and adding another 30 million subscribers and a semi-profitable business in T-Mobile doesn't tangibly change the carrier's position to do things any differently. But of course that doesn't mean we don't understand that Son would still like to see Sprint buy T-Mobile — it's simply just for different reasons than he says.

Via: Bloomberg (Yahoo Finance)