Question

Assume that you are working as an economist at DOJ. How would you go about analyzing the impact of the proposed merger between Sprint and T-Mobile? Would you be oppose the merger? What kind of counter arguments would you anticipate from Sprint or T-mobile?

Answer 1

Answer: After a long wait of around two years there seems to be light at the end of the tunnel for the USD26.5 billion T-Mobile and Sprint merger deal.

I would support the merger. Some of the positive aspects of this merger that I think include:

1) The merger would result in the emergence of third robust competitor to Verizon and AT&T companies.

2) The combined scale would bring in a faster and efficient network.

3) It would translate into better services at lower prices for the consumers.

4) From financial point, it would reduce pressure on the industry.

5) The merger would make it feasible an entry into 5G network that would not have been feasible if going alone.

6) As per the merger plan, an investment of around USD40 billion in 5G technology during teh next three years would culminate into job creation.

The doubts pertaining to raising of prices due to reduced competition does not seem to hold as the merger deal takes into account 3-year lock-in period of not raising prices.