Senate Democrats Express Concern Over T-Mobile-Sprint Merger

Sprint and T Mobile hope to close their proposed merger by next year

It started with AT&T and HBO and quickly expanded to include T-Mobile/Netflix and Sprint/Hulu (TBD what will happen with those deals if the T-Mobile/Sprint merger is approved; also, Verizon is notably missing from this list, but has alluded to launching their own streaming service).

T-Mobile said it has completed a $1.5 billion stock buyback program approved in late 2017.

The Seattle-based mobile carrier continued its run in adding new customers in the first quarter of 2018.

AT&T and Verizon can move markets with individual decisions. AT&T actually lost 22,000 of those valuable customers.

The wireless carrier also said adjusted first-quarter earnings 78 cents a share, down 2% from a year earlier, with revenue rising almost 9% to $10.5 billion. Analysts expected earnings of 70 cents on sales of $10.36 billion for the period ended March 31.

Postpaid phone subscriber trends are watched closely by analysts because those customers spend the most monthly.

Consumers are paying less for cellphone service thanks to T-Mobile's influence on the industry and the resulting price wars. It was exactly this reasoning that led the Department of Justice in 2011 to reject AT&T's bid to buy T-Mobile. Their pitch to regulators this time?


Shares in T-Mobile fell 1.8% to 59.43.

Indeed, the deal comes at a time when the U.S. carriers are duking it out to win over consumers with perks like free access to Netflix and unlimited data plans. The combined company plans to invest up to $40 billion in its network in the first three years, which executives said would drive more hiring and better service for customers.

It's these competitive pressures, which have brought the companies together. The ties between streaming services and wireless/mobility services naturally tighten as consumers increase the use of mobile devices/tablets to watch their favorite shows and live TV - the increase in data usage for these and other services sent the carriers back into the world of "unlimited" data plans after nearly all had moved away from them. To leverage the service, users must have their internet service with Comcast, which is logically going to confine Xfinity's reach to their internet footprint and will clearly have some downfalls for certain groups of consumers, e.g. if a renter moves to a new location and Comcast is no longer the ISP, having your mobile service with Xfinity is no longer an option. They're urging regulators to block the merger. Ed Markey (D-Massachusetts) warns in a letter to the Senate Commerce Committee's leaders. Markey said in a statement Tuesday that he's concerned the merger may not be in the best interest of consumers.

What are the basics of this proposed merger?

In addition, Flannery says reducing the number of top USA wireless service providers from four to three would likely ease some competitive pricing pressures on Verizon, likely one of the primary concerns among regulators.

Wall Street analysts say the deal has a better chance under the Trump administration than it did under Obama, but they're still putting the odds at most 50 percent of making through the regulatory review. In addition to the thwarted attempt three years ago, the two companies were poised to combine in October, but the deal was called off after what analysts said was a disagreement over control of the combined company. Everything from administrative positions, mid-level management, and areas where there could be duplication between the two companies.

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