If Sprint Corp. and T-Mobile US Inc. do not merge, at least one will end up failing, analysts at New Street Research LLP say.
Neither Overland Park, Kan.-based Sprint nor T-Mobile is generating enough revenue to cover fixed costs, according to New Street, a London-based equity and debt research firm that specializes in the cable and telecom sectors. While government regulators will likely block the merger, any effort to stop it will still inevitably lead to only three major U.S. carriers, New Street says.
“Consumers and the industry are better off if the companies are allowed to merge now rather than when one of them is on the brink of failure,” analysts wrote in a research note.
The chairman of Sprint, the third-largest carrier, has become a leader in publicly affirming that industry leaders Verizon Wireless and AT&T Inc. have created a damaging duopoly, squelching innovation and driving up consumer costs through their stranglehold on the market.