T-Mobile Could Consider Merger After Ban Lapses

T-Mobile US has disclosed that it could consider a merger as a federal ban that would have prevented such a move expires later this week. The ban on merger talks imposed on the telecommunication sector by the Federal Communications Commission was imposed as the regulator sought to auction airwave licenses from broadcasters worth approximately $19.8 billion for use by wireless operators. At the airwaves auction, T-Mobile was the biggest winner as it placed a bid for airwave licenses worth an estimated $8 billion.

Positive report

In a conference call after the earnings report, the chief executive officer of T-Mobile, John Legere, hinted that a merger was likely to be explored by the third biggest wireless carrier in the United States.

“The inorganic and organic possibilities for the company are tremendous. We are interested in looking at some of the possibilities,” said Legere during the conference call.

Earlier in the year reports had surfaced that SoftBank Group, the controlling shareholder of Sprint, the fourth biggest wireless carrier in the United States had strategically positioned itself for talks with Deutsche Telekom, the biggest shareholder in T-Mobile US once the ban imposed by the Federal Communications Commission expired.

Many options

Besides Sprint T-Mobile also has various other merger and acquisition options such as Comcast and Dish Network which would also assist the wireless carrier enhance its network. During the conference call, T-Mobile’s chief executive officer pointed out that Dish not only had access to spectrum but to content as well.

T-Mobile could also choose to grow organically, a fact which the wireless carrier has proven it can do well. This was demonstrated by the fact that despite the U.S. wireless market having reached saturation levels, T-Mobile has been experiencing subscriber growth at the expense of its bigger competitors – Verizon Communications and AT&T. T-Mobile has done this through offering lower prices and improving its network.

More subscribers

In the first quarter, T-Mobile disclosed that 914,000 post-paid subscribers were added to the network. While it was slower growth compared to a year earlier when 1.04 million post-paid subscribers had been added, it was still better than what analysts had projected – 847,000 net additions.

T-Mobile also fared better with regards to churn as the rate of customer defections was 1.18% which was better than what analysts had estimated – 1.27%. Total income also rose by close to 50% with net income coming in at $698 million. Revenues of $9.55 billion were recorded against projections of $9.62 billion. This was an increase of 11%.

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