T-Mobile Legere Justifies Possible Merge With Sprint
It’s still unclear whether T-Mobile (NYSE:TMUS) and Sprint’s (NYSE:S) consolidation deal will go through, but T-Mobile CEO John Legere opened his mouth this week to defend the possible merge and argue that an approved deal with Sprint would help the two carriers combat the “duopoly” that he believes Verizon Wireless (NYSE:VZ) and AT&T (NYSE:T) currently enjoy. According to Bloomberg, the unconventional chief executive was the subject of an interview conducted by Emily Chang on Bloomberg West this week, and when asked about his rumored deal with Sprint, he told Chang that T-Mobile requires more airwaves and other resources to take on Verizon and AT&T, and a consolidation with Sprint could help it meet those needs.
Legere explained to Chang that, “We all need better scale and capability. The question starts to be: How do you take the maverick and supercharge it? We either need more spectrum and capability and a lot more investment, or we need consolidation.”
Legere thus was not shy about discussing the merger deal that many Sprint and T-Mobile shareholders are currently pushing. Insider sources have said since December that Sprint’s majority owner, Softbank Corp, is working to negotiate a consolidation pact with T-Mobile, and the T-Mobile chief executive has not been quick to deny those reports. Rather, Legere has been adamant about justifying the deal, and his latest comments may be purposed to help convince regulators that a merge with Sprint wouldn’t dull T-Mobile’s edge, but actually sharpen it. Sources say that regulators’ biggest concern is that a merge with Sprint would result in the carrier industry losing its most aggressive competitor, and Legere now recognizes the needs to alleviate those concerns.
Bloomberg highlighted Friday that Daniel Loeb, founder of Third Point LLC, and investor in both Softbank and T-Mobile, also recently made similar claims about the reported T-Mobile-Sprint merge. Loeb wrote to investors earlier this week that Sprint, with the help of Softbank CEO Masayoshi Son, could help T-Mobile preserve its rebellious spirit, and the investor stands by the claim that the two companies need to work together to tame the AT&T and Verizon giants, rather than taking them on separately.
T-Mobile has made impressive gains in the years following Legere’s CEO appointment in 2012, and it is clear that Loeb would only like the company to perpetuate those advances. Faced with ever-increasing competition from AT&T and Verizon, it is possible that the investor believes that T-Mobile will ultimately be unable to take on these behemoths alone, and that he is why is so willing to push a merger deal.
Since 2012, Legere has worked to restructure T-Mobile strategies, offering more aggressive pricing and allowing customers to avoid long-term contracts, but his company still falls behind that of competitors, especially in terms of market share, and it is thus clear that something else must be done if it wants to ultimately find its way to the top. Some believe that regulators will never let a T-Mobile and Sprint merge go through, but if we know anything about CEO John Legere, it’s that no one should underestimate the might of that chief executive.