Sprint CEO Marcelo Claure met with Washington officials recently as the company presses for a possible deal to merge with rival T-Mobile, according to a published report.
Claure told Bloomberg News that the visit in late May went well and that he had “talked to a lot of good people. I told them about 5G.” A Sprint spokesman said the company had nothing to add.
5G is the emerging wireless technology expected to enable driverless cars and an assortment of internet-connected household items referred to often as the Internet of Things.
Bloomberg’s report also said Claure was helping to build a case for a merger of the nation’s No. 4 and No. 3 wireless carriers. Claure recently was nominated to join the board of directors of SoftBank Group Corp., the Tokyo-based company that owns more than 80 percent of Sprint’s shares.
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Sprint and T-Mobile officials have been public about a merger’s potential benefits to the companies. Sprint’s chairman Masayoshi Son, who openly pitched the idea of a merger to Washington three years ago, called T-Mobile a “first priority” in Sprint’s own plans. Similarly, T-Mobile’s top financial officer Braxton Carter said Sprint would be “a huge prize.”
For each, a merger holds the promise of enormous cost savings from combining their operations and networks. Many of those cost savings likely would come from eliminating jobs that duplicate efforts. A merger also would combine their subscriber bases into a single base close in size to industry leaders Verizon and AT&T.
Neither company has acknowledged publicly that they’re working toward an agreement, though Carter had said that talks “of course” would happen. He also had said a merger could trigger $30 billion in savings.
Washington’s cool reception in 2014 to Son’s campaign had led the billionaire businessman, who founded SoftBank Group, to drop his idea without ever formally seeking regulatory approval.
Since then, T-Mobile has become the wireless industry leader in signing up new customers and overtook Sprint to become the nation’s third-largest carrier. Sprint also has begun to add highly valued phone subscribers.
Price cuts have been the chief tool that Sprint in particular has used to lure customers away from rivals. Analysts have said a merger with T-Mobile could benefit the industry by limiting such competition and allowing what they call “market repair.”
T-Mobile’s success and the price competition have stirred doubts about whether regulators will greet a merger any more warmly than before. At least one analyst said both companies were
“They are crafting a message to take to D.C.,” Jennifer Fritzsche, an analyst at Wells Fargo Securities, told Bloomberg. “The burden of proof will be to show why this is going to be better for the U.S. wireless consumer, because for the last four years the industry has been good for the consumer.”