Charter, Altice, and Dish are toward the top of the US Department of Justice’s (DOJ) shortlist of buyers for the assets it’d want T-Mobile and Sprint to divest as conditions for green-lighting their proposed merger, reports Bloomberg.
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The $26 billion deal is still drawing regulatory scrutiny from various states, but selling off some of their wireless spectrum licenses along with the Boost Mobile brand could get the two operators over the line with the DOJ by providing enough resources for another national competitor to emerge.
Bloomberg also reports that the DOJ would want the companies to sell another prepaid brand in addition to Boost — possibly Virgin Mobile or MetroPCS.
Here’s what it means: Buying wireless assets off of T-Mobile and Sprint would give a cable company such as Altice or Charter the technical backbone it would need to enter the wireless space.
If Charter or especially Altice were to purchase a wireless spectrum license or prepaid brand, it’d be in a position to build a competitive wireless carrier to restore a fourth player to the market.
Either company would be able to leverage the customer base of an existing prepaid brand and serve it using purchased spectrum from this divestment, other licensed spectrum as mobile virtual network operators (MVNOs) typically employ (Altice already plans to use Sprint’s network), or some combination of the two.
Altice in particular, with its infrastructure-based MVNO plans, could be able to ramp up quickly to compete in the mobile market, though the question remains of where it will draw customers from.
The bigger picture: While the DOJ seems to want assurances that a competitor can emerge from the T-Mobile–Sprint merger’s offshoots and divestments, it appears that the request is more geared toward appeasing public concerns than ensuring there’s a fourth viable wireless option.
One of the prime factors driving the push for the merger is that Sprint is facing difficulties competing in the wireless market and devoting capital to network infrastructure — that’s why executives have highlighted that its 5G rollout could be contingent on the merger’s approval.
But if Sprint is struggling to compete in the US wireless space despite its ample resources, long track record, and strong brand recognition, a challenger carrier like Altice or Charter would be staring up at an even steeper hill to climb.
Access to an existing brand like Boost Mobile, Virgin Wireless, or MetroPCS could help, but those carry reputations as limited or budget options that could turn away potential customers. It seems that the steps the DOJ is calling for could create a fourth wireless option in the near term, but one that will lag far behind the new triumvirate and probably will fail to offer consumers a competitive choice nationwide.
See Also:
- LG Electronics is at risk of losing access to Qualcomm’s 5G modems
- Cisco has announced plans to acquire an IIoT security firm
- Here’s how global polarization over Huawei is shaping the 5G landscape
Source: Business Insider – pnewman@businessinsider.com (Peter Newman)