Partners: Sprint, T-Mobile Could Merge Under A Republican Administration

The recent election of Donald Trump is resurrecting rumblings within the telecommunications industry regarding a merger possibility between two of the largest wireless providers in the U.S., Sprint and T-Mobile.

President Barack Obama's administration blocked Sprint's previous merger attempt with T-Mobile. The Federal Communications Commission (FCC), led by current Chairman Tom Wheeler who was appointed by Obama in 2013, expressed concerns over any consolidation that would eliminate one of the four major wireless competitors.

Wheeler is expected to step down following Trump's inauguration, and Jeffrey Eisenach, a telecom consultant and known critic of Wheeler's policies -- including net neutrality -- is said to be his successor. Eisenach is on Trump's transition team and is already helping to select new FCC members. With power changing hands, the regulatory environment could favor more telecom consolidation, partners say.

[Related: What A Trump Presidency Could Mean For Net Neutrality, Cybersecurity And Telecom Consolidation]

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A majority-Republican Congress typically indicates a friendlier environment for big business mergers. Republican politicians tend to be more for markets regulating themselves, as evidenced by their stance against net neutrality, according to one solution provider executive that requested anonymity.

The solution provider, which partners with several wireless providers including Sprint, pointed to Sprint's stock climbing 12 percent and T-Mobile's stock also rising by 3 percent the day after the election.

"I think we are going to see even more mega telecom mergers go through in an environment that doesn't believe in regulation. I think that laissez-faire attitude is certainly reflected in Trump's transition team," said Natasha Royer Coons, managing director of San Diego-based TeraNova Consulting Group, a telecom expense management provider for wireless solutions that partners with both Sprint and T-Mobile.

However, Coons said that if T-Mobile and Sprint, the number three and number four U.S. wireless providers, decided to merge, there would be little impact for partners.

"I do like competition. I think it keeps companies delivering high-quality services for great prices, [but] I'm not against mergers that make sense and provide a more seamless delivery of services," she said.

A merger between the two wireless providers wouldn't necessarily diminish competition for businesses and consumers, partners said. "Mobility is being redefined, so I'm not sure that customers would be hurt if Sprint and T-Mobile merge," the anonymous executive added.

For its part, Sprint's CEO Marcelo Claure indicated in August that if the regulatory environment were favorable, the Overland Park, Kansas-based carrier would still be interested in merging with Bellevue, Wash.-based T-Mobile.

However, Trump has not been a typical Republican candidate, so it's yet to be seen whether the regulatory climate under his administration will encourage consolidation, the anonymous solution provider executive said. During his campaign, for example, Trump did single out some large-scale mergers -- including AT&T and Time Warner -- as an example of a deal he would not allow under his administration.

But if the two wireless providers don't merge, an acquisition of either Sprint or T-Mobile by a larger company, such as Comcast or CenturyLink, is also possible, the anonymous partner said.

Along with Comcast, DISH Network and Google are also being singled out as possible buyers for either Sprint or T-Mobile by industry analysts.

A wireless service provider would let Comcast bundle TV, voice, internet, and wireless for its customers, effectively zero-rating its own content, like AT&T does to boost its DirecTV service. However, the Philadelphia-based cable giant may have its own homegrown service in the works. Comcast said that it would be launching its own wireless practice by mid-2017. The service, according to the company, will use leased airwaves from competitor Verizon Wireless, as well as its own network of 15 million Wi-Fi hot spots.

Many of the large, incumbent carriers are starting to think seriously about offering more than just the pipes, as evidenced by AT&T's potential acquisition of Time Warner and Verizon's takeover deal with Yahoo. In addition to content, wireline providers are also looking at wireless as a way to go beyond their core connectivity offerings, Coons said.

"These content-related mega mergers, like Verizon/Yahoo, have really set the stage for [carriers] to wonder: 'What's the next frontier?' And wireless could be it for providers that don't have a [mobility] play," she said.