The National Wireless Independent Dealer Association is the latest industry player to step out against the proposed merger of Sprint and T-Mobile, arguing that the transaction would stand as a “devastating blow” to prepaid customers, MVNOs and wireless dealers.
“The proposed T-Mobile/Sprint merger, without the divestiture of one or more brands, would have costly consequences to all our member independent wireless dealers across the country and their employees,” said Adam Wolf, president of the NWIDA, in a release. “If the new T-Mobile is permitted to retain the Boost Mobile, MetroPCS and Virgin Mobile brands, it will clearly lead to consolidation, reduced competition and excessive control of the prepaid wireless market by a single carrier. That would be a devastating blow to our industry.”
Specifically, the NWIDA pointed to the nation’s 30,000 wireless dealers, both owned and independent, arguing that a merger between Sprint and T-Mobile would likely affect the two companies’ prepaid brands. NWIDA said that there are roughly 8,000 independently owned Boost Mobile retail stores (Boost is a prepaid brand of Sprint) and 11,000 MetroPCS stores (MetroPCS is T-Mobile’s prepaid brand).
The NWIDA and its president explicitly pointed out that the association is joining Peter Adderton, founder and former CEO of Boost Mobile USA, in expressing concerns about the proposed merger. Adderton earlier this month took a public stance against the merger, partly to push regulators to require that the combined Sprint and T-Mobile divest their prepaid businesses so that he can potentially step in and take control of those operations.
In addition to announcing their teaming, the NWIDA and Adderton also launched a website urging others to challenge the transaction. The all4price.com opposition website is a play on the allfor5g.com website launched by Sprint and T-Mobile that lays out their argument for approval of the transaction. The all4price.com site argues that “if the Boost Mobile and MetroPCS brands are included in this merger, it would be bad for the overall competitive landscape, bad for the prepaid market, bad for our country’s Mobile Virtual Network Operators (MVNOs) and bad for the economy.” It encourages visitors to petition against the transaction to Sprint and T-Mobile’s CEOs as well as elected officials.
While some have argued against the transaction, new research from consulting firm Strategy Analytics found that the transaction, if approved, would create a “17% uplift” and speed up the rollout of 5G network technology in the United States.
“With the merger, the new company would be better positioned for a convergence play, growth in automotive and other high mobility/broad coverage 5G use cases, with new strength in wholesale and enterprise and positioning for Network-as-a-Service (NaaS) with 5G network slicing,” said Susan Welsh de Grimaldo, director at Strategy Analytics, in a release.
However, Strategy Analytics’ Phil Kendall noted that “everything comes at a cost. Operators in three-player markets enjoy EBITDA margins 3-4 percentage points higher than those in four-player markets so a merger on this scale may weaken price competition and increase operator profits.”
Although the NWIDA’s Wolf and Boost’s Adderton are relatively minor players in the nation’s overall wireless industry, the situation could nonetheless create a headache for executives at Sprint and T-Mobile who are challenged with getting approval for a transaction that faces substantial regulatory hurdles.