There has been mounting speculation in recent weeks that Softbank, the Japanese wireless behemoth with ambitions to conquer the globe, and already the owner of Sprint, will soon launch a bid for T-Mobile USA.
This week, reports suggested (paywall) both sides of the potential deal were cooling on the idea. But comments from Masayoshi Son, Softbank’s eccentric CEO, and Japan’s second richest person, suggest it is still very much a possibility.
“There are a lot of media coverage about T-Mobile, especially the potential merger of Sprint and T-Mobile. But as of today, as Chairman and CEO of SoftBank, I’m not in position to make any comments on that. There are a lot of rumors and speculations. But as of today, well if I make any comments on the rumor, that could have a grave implication in many aspects. So I’d like to refrain from making any comments,” he said before doing just that.
But one thing I’d like to say here is that the competition in US market is not really intense compared to other countries because in my view, the network in the United States is not world-class.
In terms of pricing war, I don’t see any intense price war in the United States… There’s duopoly in the United States in wireless markets. And two duopoly company, duopolistic companies are enjoying such situation. That’s what’s happening in the United States.
Here’s why the comments are notable: As we have recently discussed, T-Mobile has been undergoing quite the renaissance under the unorthodox stewardship of its relatively new CEO, John Legere. It has ripped customers away from its rivals by introducing simpler plans, lower global roaming fees, and offering to pay out early termination fees. This has created a price war in the wireless industry, which many analysts view as unsustainable over the long term.
T-Mobile’s renewed vigor has led many to believe that regulators wouldn’t sanction a tie-up between Sprint and T-Mobile USA. After all, regulators blocked AT&T from buying the carrier back in 2011. More recently, America’s top telecom regulator said it would be hard for anyone to make a persuasive case that reducing the number of players in the industry from four to three would increase competition and benefit consumers.
But Masayoshi Son’s comments suggest Softbank and Sprint think they can do just that. They are likely to argue that a combined Sprint-T-Mobile would be able to invest more in a network that can compete with Verizon Wireless and AT&T on coverage and quality, not just prices.