Boston, MA 05/29/2014 (wallstreetpr) – Following the surprise subscriber gain that T-Mobile US Inc (NYSE:TMUS) registered in 1Q2014, analysts worried that the company’s progress might work against its merger with Sprint Corporation (NYSE:S), which is owned by SoftBank.
TMUS added 1.3 million new wireless subscribers to its network in 1Q, 300,000 more than the number estimated by analysts. The subscriber gain in the quarter also exceeded the 1.16 million gain registered by the leading providers Verizon Communications Inc (NYSE:VZ) and AT&T Inc (NYSE:T).
However, SoftBank does not think that the recent success of T-Mobile US Inc (NYSE:TMUS) in subscriber addition would have an impact on its attempt to acquire the company. Speaking at a conference in California yesterday, SoftBank CEO and Sprint Chairman Masayoshi Son sought to explain why the combination of T-Mobile and Sprint would be in the best interest of the consumers.
Duopoly Hurting Speeds And Prices
According to SoftBank, the main reason T-Mobile and Sprint are better together is that the current arrangement in the U.S. telecom market hurts the quality of service and costs that consumers should enjoy. Mr. Son cited that the duopoly of Verizon and AT&T is responsible for the lows speeds and higher costs for the wireless Internet.
However, a combination of T-Mobile US Inc (NYSE:TMUS) and Sprint would enable the companies to inject serious competition in the industry to help drive down the cost and improve the quality. Mr. Son who claimed his campaigns in the Japanese telecom industry led to lower Internet costs and higher speeds intends to replicate the same in the U.S.
Regulatory Concerns
SoftBank is expected to make a bid for T-Mobile in June or July. However, concerns are raised about whether such a deal would sail through regulatory review given that U.S. regulators have always sought to keep four nationwide competitors. The ability to obtain regulatory nod for a tie-up of T-Mobile US Inc (NYSE:TMUS) and Sprint is also complicated by the recent developments in which T-Mobile showed its ability to compete effectively by adding more new subscribers than projected.
