Corporate mergers are significant events in the world of American business. When two major companies join forces, it has the effect of removing a competitor from the marketplace while empowering an existing entity. The result is a new, super-company with more power and influence than before — and with less competition, the power to price their products and services accordingly.
Of course, that’s the reason legislators and politicians tend to oppose mergers — out of fear of monopolies and anti-competitive practices. A perfect example of this back-and-forth is the long-running saga of T-Mobile’s merger with Sprint, which has been stymied for years behind red tape and government inquiries.
Well, all that ended this week as Justice Department regulators finally approved the T-Mobile-Sprint merger after months of fevered speculation. This new venture combines two of the nation’s biggest carriers, and narrows your choice of providers down to just three major telecom companies! Here’s what this seismic event means for your phone plan, and more importantly, your wallet.
A long-awaited union
T-Mobile and Sprint have been attempting to join forces since at least 2014, but the companies finally seized a major victory in the form of a Justice Department approval. T-Mobile, who initiated the merger, will retain its name for the new company as it expands to cover more than 8 million customers across the U.S.
Despite the excitement from investors, however, the deal is not 100% set in stone. According to reports from the Associated Press, a number of state Attorneys General have petitioned to stay the merger — citing anticompetitive practices and a lack of consumer choice as major reasons the merger should not proceed.
While the process to merge the companies is now in motion, if any of these lawsuits are taken up by a federal judge, the whole thing could be put on hold (or even potentially stopped, if the Attorneys Generals are able to win.)
But for now, it’s relatively safe to assume that the merger will happen. Not only does it have the approval of the Department of Justice (DOJ), but the FCC is also backing the deal in exchange for T-Mobile and Sprint promising to expand 5G availability, divesting themselves from prepaid brand Boost Mobile, and maintaining prices for a minimum of three years.
Boost Mobile, its customers, and several smaller T-Mobile subsidiaries would become the domain of Dish — the satellite TV giant. This would, according to DOJ, allow Dish to grow into a mobile carrier of its own.
How can this merger benefit me?
This is an important time to consider the magnitude of this corporate takeover. T-Mobile and Sprint are both massive companies with respectable user bases. When combined, all of these customers will now fall under the T-Mobile umbrella — but some significant changes will occur for customers who are currently with Sprint.
T-Mobile and Sprint both have national coverage, but T-Mobile edges Sprint out in both availability and speed. Existing Sprint customers can expect their service availability to expand rapidly, and may notice the quality of their calls and data increasing as well. This is a major plus since Sprint is notorious for spotty coverage (particularly in rural areas.)
Another curious side effect is the potential death of SIM cards. SIM cards are what connect a phone to a carrier, which means that obtaining a SIM requires talking to one and agreeing to a contract or plan. Part of the conditions approved by the DOJ requires T-Mobile to roll out electronic SIM cards, or eSIMs, which would make it easier for users to switch carriers if they so choose.
How does this affect my bill and my wallet?
A point raised by regulators that is absolutely worth thinking about is pricing. When regulators cite business practices as “anti-competitive,” this means that they’re reducing the abilities for consumers to choose in a free market.
With fewer companies to pick from, individual companies have more say in how they price their services. Rather than attempt to compete with other carriers that offer lower rates (like Sprint did), the competition is now gone — leaving T-Mobile to potentially increase rates on its customers.
Fortunately, should the deal finalize, T-Mobile has agreed to the condition of keeping rates the same for three years. After this point in time, it’s unknown what will occur.
T-Mobile has built quite a bit of goodwill with its “uncarrier” campaign and has associated its brand with low prices and customer benefits. But a corporation’s ultimate goal is to increase the revenue of its shareholders, so it’d be naive, in my opinion, to assume that they wouldn’t raise rates at some point in the future — regardless of its previous actions.
So, in short, expect major changes going forward (on both coverage and pricing) — but not in the short term. These kinds of legal agreements, as we’ve seen, can take years to fully unfold. As for T-Mobile’s endgame, we can only hope it doesn’t drop the “uncarrier” ethos any time soon. It’s been a draw for customers, anyway. Why alienate them for the sake of more money?
But then again, that’s business for you! We’ll keep our fingers crossed.