Service costs may go up thanks to Sprint/T-Mobile merger failure
The analysis coming out of a MoffettNathanson note, obtained by Barron’s, suggests that Sprint service will continue to suffer as it won’t be able to take advantage of synergies if a T-Mobile merger were to happen. The two carriers ended merger talks last month and Sprint is believed to have been the leaving party.
“Robbed of the prospect of a merger — at least for now — Sprint will now have to focus on sustainability. That means less, not more, promotionality,” Craig Moffett writes. “With less promotionality will come not only less pricing pressure, but probably also fewer net adds for Sprint… and hence more for everyone else.”
Already, we’ve seen Sprint’s parent SoftBank working on capital expenditures and inking deals with media and infrastructure partners to bolster value-adds. The carrier also said publicly that it will be reducing price promotions on its plans, making them less appealing for the perceived amenities of the network. In turn, that gives room to everyone else to jack up customers’ bills.
Still, Moffett sees major bond maturities coming for Sprint’s tight wallet in the next two years, making the hill a steep climb. And while SoftBank made a bold claim to one of its largest foreign assets, it might not be able to funnel the money it needs quickly enough to get the carrier up to snuff.