Merger Lawsuit Docs Reveal T-Mobile Eyed Merging With Comcast

from the Meet-the-new-boss dept

We’ve long noted that T-Mobile’s brand reputation as a feisty consumer-friendly disruptor is only really skin deep. While the T-Mobile of 2012 or so certainly added some much needed competition to the wireless sector (killing ETFs, eliminating long-term contracts, and eroding international roaming costs), more recently the company has started to look a lot like the bigger competitors (AT&T, Verizon) it pretends to be superior to. From mocking groups like the EFF to opposing net neutrality, the company isn’t all that different from the companies its brash CEO John Legere likes to make fun of.

Case in point: during the ongoing multi-state AG lawsuit attempting to stop the merger, documents were released showing that one of T-Mobile’s master plans was to first buy Sprint then merge with Comcast. Yes that Comcast; one of the least liked companies on the planet, frequently mocked by Legere as a clear example of industry dysfunction. The presentation, assembled at the request of T-Mobile board member Thorsten Langheim in December 2015, highlights how T-Mobile owner Deutsche Telekom was eager to use T-Mobile to exploit the poorly regulated and marginally competitive US telecom market:

“The report, which is labeled as ?confidential? throughout, suggests T-Mobile owner Deutsche Telecom had bet heavily on the US wireless market, where the company saw less regulation and higher average revenue per customer than in Europe. Analysts also predicted that, as the company reached the limits of its organic growth, it would have to rely on industry-wide consolidation to continue its growth after 2018. The report also cautions the company against pricing too aggressively in order to maintain those profits and the attendant merger potential. As the final slide puts it, ?don?t trigger a price war in the US market (stable ARPUs base drives attractiveness & valuation.)?

We’d long noted that despite a lot of breathless press hype, T-Mobile’s impact on American US wireless pricing (some of the highest in the developed world) was not all that. And with the 4-3 consolidation presented by T-Mobile’s $26 billion merger with Sprint, most objective analysts say even higher prices are the likely result. T-Mobile, hipster Millennial pro-consumer branding schtick in tow, knows this very well. The docs show the company also knows that the DOJ’s flimsy fix to have Dish step in and try to fix the problem the deal creates aren’t realistic:

“The documents also cast doubt on one of the central claims of T-Mobile?s merger, which has sought to prop up Dish as a competitive wireless provider, backed by an MVNO deal with T-Mobile in advance of its own network buildout. But the document, which was prepared before the Dish deal was even considered, sees it as unlikely that any MVNO could provide meaningful competition to T-Mobile.”

Yes, early T-Mobile (created ironically from the government’s decision to block a merger with AT&T in 2011) was marginally disruptive. But modern T-Mobile is more of a stage play; designed to look disruptive without trying too hard to kill the captive cash cow. Like any corporation, T-Mobile’s primary objective is to drive shareholder growth, something they feel is only actually possible via an endless series of merger and acquisitions resulting in fewer jobs, higher prices, and progressively worse service.

Normally that’s where a functioning government would step in and protect the market, competitors, and consumers from antitrust violations. But in the Trump era, when corruption and regulatory capture are barely even hidden and even applauded, that’s obviously not happening. As a result, a coalition of state AGs is the last line of defense between you and a significantly higher wireless bill courtesy of our mindless obsession with “growth for growth’s sake.”

Filed Under: , , ,
Companies: comcast, sprint, t-mobile

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Comments on “Merger Lawsuit Docs Reveal T-Mobile Eyed Merging With Comcast”

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Anonymous Coward says:

regardless of which company T-Mobile was ‘eyeing’, the merger should have been stopped because it was predicted when first spoken about and i have no doubt whatsoever it will prove to be true, it will be a total fucking disaster for all involved, except the top brass of the companies and those paid ‘campaign contributions’ to pass the deal! customers are going to get even worse service than at the moment, hundreds, at least, will lose their jobs and prices will sky rocket. everyone other than those directly making money know this yet it is still approved. ridiculous!!

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