After years of negotiations, the major wireless carriers Sprint and T-Mobile announced a massive merger on Sunday (April 29), but a Texas Tech University economics expert says it’s not a done deal yet.
The merger would combine the third- and fourth-largest wireless service providers in the nation. Based on their last closing prices, Sprint is valued at $26 billion and T-Mobile is valued at $55 billion.
Michael Noel, an assistant professor in the Department of Economics, specializes in industrial organizations. He has consulted for both private firms and governments in high-profile merger and antitrust law matters around the globe. Noel also has conducted analyses relating to price fixing, collective dominance, coordinated behaviors, mergers and regulation in a variety of industries including oil and gas, supermarkets, managed health care, pharmaceuticals, packaged software, payment cards, book publishing, online search, communications and auto manufacturing.
Expert
Michael Noel, associate professor of economics, (806) 834-6342 or [email protected]
Talking points
- The merger has a significant chance of being quashed by regulators.
- The merger would take the current number of national carriers from four to three, while T-Mobile claims the more correct number for competitive analysis is six to eight. It would replace the third- and fourth-largest firms with the second, above AT&T and below Verizon.
- One concern is likely to be that T-Mobile, sometimes considered a “maverick” firm whose low prices and aggressive offerings have applied downward pressure on the industry generally, may change its pricing focus with the acquisition of Sprint. T-Mobile claims the merger will decrease prices but is short on specifics.
- The potential advantage to consumers is a bigger, greater T-Mobile/Sprint network that would allow T-Mobile to better compete on quality and be better able to develop a competing 5G network.
- The merger has significant similarities to the proposed DirecTV-Dish Network merger that failed to pass regulatory approval 15 years ago.
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