T-Mobile US CFO says industry consolidation is inevitable

NEW YORK Mon Mar 10, 2014 3:37pm EDT

A T-Mobile store sign is seen in Broomfield, Colorado February 25, 2014. REUTERS/Rick Wilking

A T-Mobile store sign is seen in Broomfield, Colorado February 25, 2014.

Credit: Reuters/Rick Wilking

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NEW YORK (Reuters) - T-Mobile US expects to engage in some form of cellular industry consolidation, the CFO of the United States' fourth-largest carrier said on Monday, boosting investor expectations that a merger with Sprint Corp could be on the horizon.

"It is not a question of if, it is a question of when," Braxton Carter said about the company's prospects for consolidation at a media, internet and telecom conference.

"To take a third-scale national player that has the scale benefits with the right business model could be very competitively enhancing in the U.S.," he said.

The comments come on the eve of an address by the president of SoftBank Corp, which owns 80 percent of Sprint, to investors and technology policymakers in Washington on Tuesday.

Hopes for a merger between Sprint and T-Mobile, the No.3 and No.4 U.S. mobile service providers, faded last month when reports surfaced that the U.S. Department of Justice and Federal Communications Commission would look skeptically on a merger.

U.S. regulators previously rejected AT&T Inc's $39 billion takeover bid for T-Mobile US in 2011. They have since argued that T-Mobile US has grown stronger, proving that the market can sustain four companies.

Carter said that if the government wants to preserve competition it must prevent the country's two largest carriers, AT&T and Verizon, from dominating spectrum auctions.

"The government can't have their cake and eat it too. If they think there really needs to be four players in this market on a nationwide basis, they are going to have to put some structural protections to ensure an adequate distribution of spectrum," he said.

Deutsche Telekom, T-mobile's majority owner, said last week that it would be open to a potential consolidation in the U.S. mobile market but that it was in no hurry.

"At the moment we have no difficulties to run T-Mobile US on a stand-alone basis," Deutsche Telekom's Chief Executive Tim Hoettges told a news conference.

"If a consolidation in the U.S. mobile market will take place, we will enter that phase with an open mind," he added.

Carter's remarks also came despite a string of tweets last week by T-mobile's outspoken CEO, John Legere, berating Sprint.

"Remember when people actually liked @sprint? Yeah, me either," Legere tweeted.

(Reporting By Marina Lopes; Editing by Nick Zieminski)

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Comments (2)
Frankxr wrote:
The government should continue to side with consumers. If regulation to ensure competition for spectrum is required then so be it. The upfront loss in revenue is more than made up in the consumer benefit of competition.

Likewise, competition breeds innovation – no longer should managers benefit from financial and operational gymnastics and efficiencies gleaned through consolidations and vulture economics. While there is merit in cost control there is more value in true innovation. We need to start focusing on value through innovation and creation of top line value and stop rewarding mangers whose idea of value creation is handing out more pink slips. No company ever became truly great based on cutting costs. You become great though great must have products and services people are willing to pay for. If you love mobile and telecom like I do hit my up on Linkedin. I am Frank Ramirez New Products Marketing Leader/ Consultant in Seattle.

Instead of banking on consolidation as a quick fix panacea – think about how you might organically build and grow the business by creating more real value for end customers.

Mar 11, 2014 5:51pm EDT  --  Report as abuse
Wil06 wrote:
These companies instead of competing like they should be, they just want to grow the easy way, by buying up their DIRECT competitor. That’s right T-Mobile and Sprint are direct competitors because they are 2 nationwide wireless carriers. See, when T-Mobile wanted to buy MetroPCS, MetroPCS was a REGIONAL wireless company, sure it competed with T-Mobile in some markets but not on a nationwide basis. AT&T, Verizon, Sprint and T-Mobile are all competing on a nationwide basis. Reducing our nationwide wireless carriers from 4 to 3 is NOT in the publics interest and it violates antitrust laws. Canadians learned that the hard way and now they only have 3 nationwide wireless carriers who collude in prices and innovation.

Instead of swallowing your direct competitor why don’t you invest your money in expanding your network, upgrading your network, and using interesting strategic ways of luring a consumer from a competitors network to try out YOUR network?

Mar 13, 2014 2:05am EDT  --  Report as abuse
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