• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Technology

T-Mobile-Sprint Could Have Very Different Impacts on U.S. Wireless vs. Broadband

In the long run, the deal could be bad news for U.S. wireless pricing and competition, but good news for the U.S. broadband market.
By ERIC JHONSA
Feb 11, 2020 | 03:25 PM EST
Stocks quotes in this article: TMUS, S, DISH, VZ, T, NOK, ERIC, MRVL

Talking simply as a consumer, I've had pretty mixed feelings about the T-Mobile/Sprint deal from the start.

On one hand, you don't need to be an expert in antitrust law to see why merging the two lowest-cost nationwide carriers in a U.S. wireless market featuring just four nationwide players could be bad news for consumers over the long-term -- particularly given that the U.S. wireless market has seen a fair amount of price pressure in recent years.

To be fair, T-Mobile (TMUS) has promised to keep its prices at or below the levels that they're at as of the time of the Sprint (S) deal's closing for three years. And to win regulatory approval, T-Mobile/Sprint struck a $5 billion deal with spectrum-hoarding Dish Network (DISH) that aims to create a fourth nationwide carrier by giving Dish Sprint's prepaid businesses and some of its low-band spectrum, as well as access to the post-merger T-Mobile's network for seven years.

In addition, T-Mobile, whose coverage still trails Verizon (VZ) and AT&T's (T) in many non-urban areas, has promised to make giant 5G network investments. That's a big reason why Nokia (NOK) and Ericsson's (ERIC) shares, as well as the shares of mobile infrastructure chip suppliers such as Marvell Technology (MRVL) , have rallied strongly in response to the T-Mobile/Sprint deal's approval by a federal judge.

But there are no promises regarding what T-Mobile's pricing will be like after three years. And it's also far from clear right now just how large and competitive a player Dish, which has a sizable debt load and is prohibited from reselling the assets it's buying from Sprint for three years, will be over the long run.

However, for all the legitimate concerns that exist about T-Mobile/Sprint's potential impact on wireless pricing, the deal could ultimately do a lot of good for a U.S. broadband market where competition, pricing and availability are often far from ideal.

A 2018 FCC study found that 30% of developed U.S. census blocks had only one broadband provider delivering 25Mbps+ download speeds and 3Mbps+ upload speeds, and that 13% had no such providers. Another study found that among countries where 60Mbps+ download speeds are available, the U.S. has the sixth-highest average broadband bill in the world, trailing only the UAE, Qatar, Guatemala, Iceland and Saudi Arabia.

T-Mobile, which upended a U.S. wireless market that was dominated by Verizon and AT&T with the help of aggressive pricing and promotional activity, has insisted it will do the same for a U.S. broadband market still dominated by cable and telco duopolies, should the Sprint deal close. Among other things, T-Mobile has promised to deliver -- with the help of Sprint's spectrum and big 5G investments -- 100Mbps+ speeds to 90% of the U.S. population, along with home broadband service to more than half of all U.S. households, by 2024.

Even if T-Mobile makes good on its promises, many affluent consumers will probably remain loyal to cable and telco ISPs, given the speed advantages these ISPs will likely maintain on the high end.

But provided that T-Mobile prices aggressively and can reliably deliver speeds of at least 25-30Mbps on a large scale -- not a stretch, given its spectrum resources and 5G's technical abilities -- it could peel off a decent number of more cost-sensitive consumers, the same way it did in the U.S. wireless market despite having less spectrum and coverage than Verizon and AT&T.

Also, though there's no way to know for sure right now, T-Mobile's track record provides at least some reason to hope that the self-proclaimed Un-carrier won't embrace an AT&T/Verizon-like wireless pricing strategy after three years. Verizon and AT&T are still dominant in the corporate and high-end consumer wireless markets, and the T-Mobile of 2023 might still be eager to undercut them.

Certainly, the federal judge who just approved the T-Mobile/Sprint deal believes this will be the case. American consumers can only hope that he's right.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
TAGS: Investing | Technology |

More from Technology

Palantir Technologies Looks Toppy and Further Declines Are Possible

Bruce Kamich
Jan 21, 2021 11:06 AM EST

Stand aside from the long side.

Tech Gives Push to Market's Rotation

James "Rev Shark" DePorre
Jan 20, 2021 4:49 PM EST

Money moved back into big-cap technology names, thanks to strong positive reactions to earnings from Netflix.

Netflix's Post-Earnings Surge Might Bode Well for Microsoft, Facebook and Amazon

Eric Jhonsa
Jan 20, 2021 2:40 PM EST

The streaming giant's numbers and commentary were arguably just good, rather than amazing. But with its stock having underperformed for months, that's all that markets needed.

Nano Dimension's Cash Raising Could Lead to Some Intriguing Scenarios

Timothy Collins
Jan 19, 2021 12:15 PM EST

In four months, NNDM will have raised $1 billion in cash.

Cybersecurity Stocks that Lagged in 2020 Could Get Boost from SolarWinds Hack

Eric Jhonsa
Jan 16, 2021 8:00 AM EST

The hack stands to drive an uptick in corporate and government spending to protect both on-premise and cloud assets.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:16 AM EST CHRIS VERSACE

    Worst Stocks to Buy for the Biden Presidency

    Biden's take on the minimum wage, likely moves on ...
  • 08:35 AM EST GARY BERMAN

    Thursday Morning Fibocall for 1/21/2021

    SPX (Long-Term View) The 1/20/21 NEW high @ 3859...
  • 11:38 AM EST CHRIS VERSACE

    Best Stocks to Buy for the Biden Presidency

    President-elect Biden's massive stimulus plan, int...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login