SoftBank CEO Takes His Case for T-Mobile Deal to the People
Of the top 16 national economies, the U.S. is ranked 15th for wireless broadband speeds despite ranking second for the cost of wireless service. SoftBank CEO Masayoshi Son is using that to lobby for support for a deal by SoftBank's Sprint to acquire T-Mobile. Regulatory agencies have suggested a merger might not be approved.
Son is trying to change that stance by suggesting a price war would be possible if Sprint combined with T-Mobile. In a rare U.S. appearance, the CEO of the Japanese telecom giant spoke in front of the U.S. Chamber of Commerce and then talked with reporters about the deal. Son touted the benefits of having three strong wireless service providers in the U.S., noting that Sprint in Japan had brought down wireless prices while boosting speeds.
To the Public
Sprint executives met with the U.S. Department of Justice earlier this year but did not receive an encouraging response on the proposed merger due to antitrust concerns. So Son is looking to convince consumers and business executives of the merger's benefits, appearing before the U.S. Chamber, speaking with the press and doing an interview with PBS television's Charlie Rose on his visit to the U.S.
Even if Sprint were to try and become more competitive, Son said, it would fail without a merger because of the carrier's negative cash flow and small size. "We can start a small fight but it does not scale, it does not last, it's not sustainable," the CEO said. "…We need to have a real fight -- a long and deep and heavy fight. And for that we need scale."
Lack of Coverage
One of the issues pointed out in regard to a possible merger of Sprint and T-Mobile is that even though there would be an increase in wireless spectrum, geographic coverage would still lack in comparison with AT&T and Verizon Wireless.
By the end of 2014, Sprint and T-Mobile will still not be able to offer LTE coverage for more than 50 million Americans, compared with the top two carriers which cover the majority of the 317 million Americans. This means that if a merger were to occur, the lack of coverage would still be an issue since both carriers do not offer LTE in similar areas. Given the financial trouble that Sprint is already in and the massive upgrades that are under way, a merger may not provide the same benefit to consumers that Son has suggested.