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A new report by MoffetNathanson Research expects the failed merger of Sprint and T-Mobile to lead to tougher times for the former. Both T-mobile and Sprint, the third and fourth largest carriers respectively, had been in talks for a pretty long period of time, before finally calling off their merger altogether at the beginning of the month. A new report out today, though, suggests that the failed merger could have some positive effects on the market in the long run, but Sprint is set to find competing in the market much harder.
Although the prospect of a merger would have significantly improved both carriers’ position against their rivals by adding $50 billion in value, the report claims that the overall result for consumers could have been much more negative. After all, by losing a carrier, the remaining three would face less competition, thus pricing pressure, as well as the need to improve their overall services and offers would be reduced. Not only this, but the need for competitive promotions would have also weakened, another negative effect for consumers. As a result, the overall outcome for wireless customers is likely to be positive. Customers aren’t the only ones that will be affected, though, with Sprint expected to face some hard times in the future. By pulling out of the deal Sprint’s $38 billion debt and its plans to spend billions on expanding its network will force it to focus solely on profits instead of increasing its market presence, therefore reducing competition for the remaining three carriers. In addition to this, the company’s economic situation is likely to result in a decrease in promotions and marketing on the carrier’s behalf in order to cut costs. For the time being, though, Sprint has announced its intention to raise prices in order to invest in its network and counteract its lack of competitiveness.
In terms of the remaining three carriers, the outlook is expected to be much more positive from a financial point of view. The lack of competition from Sprint and the company’s new focus on sustainability rather than market share is expected to boost net adds for all three remaining carriers. For Sprint, though, with the competition likely to increase in the future, as well as their lack of money, it’ll remain to be seen how the company continues to survive as a standalone company.