Analytics: There May Be A Chance for Sprint,T-Mobile Merge To Be Successful

Analysts say that there may be a slim chance of getting the Sprint and T-mobile merger deal approved by US regulators, especially that the merger would leave the industry with only three major carriers. However, a report from Strategy Analytics showed its pros and cons.

According to the report, Sprint and T-Mobile combined would be a totally different entity as compared to one that would have come into being had the US regulators approve AT&T bid in 2011.T-Mobile's CEO John Legere, who took over the company in 2012, tends to agree that AT&T's attempt seemed to have been a greedy move, giving an unfair advantage to competitors. However, Strategy Analytics report still shows that even if Sprint and T-Mobile combined would be more competitive in terms of subscribers, their margin of service revenue would still be weak in comparison to Verizon's and AT&T's. The report further showed that Sprint and T-Mobile's earnings before interest, taxes, depreciation, and amortization (EBITDA) margins is only at 20% for the first quarter of this year, while competitors Verizon and AT&T are at 50% and above 40% respectively.

Nonetheless, for wireless subscribers, excluding wholesale and cellular M2M connections, Sprint and T-Mobile combined would fare better than their rivals. They have almost 100 million postpaid subscribers, while their competitors only rounded up to 80 million for AT&T and a little over 100 million for Verizon in the first quarter of 2014. With Sprint and T-Mobile, they would beat both AT&T and Verizon if they push a lot of their customer to using Smartphones. For both companies, it would be about finish a lot of their network upgrades, especially if they would like to push for much bigger market such as cellular M2M connectivity, which AT&T still leads despite plans of shutting down its 2G networks by 2017.

T-Mobile claimed recently that their LTE build is now nationwide, which currently covers 210 million POPs. They had set it to increase to 230 million by midyear and 250 million by end of the year. Sprint, however, has been dumping a lot of cash into some of its network overhauls that had caused them a net loss of $151 million in the most recent fiscal quarter. Although Sprint has recently partnered with Feeney Wireless in efforts to integrate mobile connectivity to M2M solutions using Skyus 4G LTE, an embedded self-contained add on unit built for embedded applications, that connects via USB and has a common interface across various systems, wireless and mobile gateway as well as other M2M enabled devices.

Still Analysts are optimistic. The merger would make Sprint and T-mobile a relatively large carrier, ready to compete with its rivals. It would have close to a 90 million subscribers as opposed to AT&T's 102 million and Verizon's 103 million subscribers. Analysts agree that it will be a tough for the regulators but it will be good for the consumers. And the revenue that the companies combined would be able to bring would be something close to what their rivals would be able to bring to the table.