T-Mobile Says Sprint Deal Can Challenge Verizon and AT&T
By Julie S | Jan 25, 2014 10:57 AM EST
The merger of T-Mobile US and Sprint can challenge AT&T and Verizon which are the top 2 carriers of the U.S., T-Mobile CEO John Legere announced Friday.
Since he became CEO, Legere has focused on modifying the company's services' prices, and ditching traditional industry practices like offering long-term bonds to subscribers. He also enjoys taunting his rivals, sometimes in a form of extraordinary promotions.
One form of giveaway promos to attract customers of rival networks is the $450 credit upon shifting to T-Mobile. The company is also offering to shoulder early-termination fees when subscribers chose to terminate their contracts with other rivals to join the company.
"This is a very profitable growth business for us," he said in an interview with Bloomberg Businessweek. "I can't help it if someone has artificially used the duopoly to drive artificial margins. That's not a price war -- that's healthy competition."
He has been eyeing on a partnership with Sprint. T-Mobile is currently in direct talks with SoftBank Corp, which owns 80 percent of Sprint, about the possible union.
"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," he said to Bloomberg Businessweek.
With the strategies and promotions he implemented, Legere was able to stop the subscribers from leaving T-Mobile and increase the company's market shares. However, regulators might block the Deutsche Telekom's company's union with Sprint because the industry would lose its most aggressive rival.
Third Point LLC founder Daniel Loeb, also an investor in T-Mobile and SoftBank, said that if Legere would contest that the deal would make T-Mobile a bigger renegade, concerns might take the edge off.