Sprint T-Mo merger would rival size of ATT

Citi Investment Research sparked a reaction in the market today by predicting that Sprint and T-Mobile will merge before the end of 2010. Company analyst Michael Rollins in a note increased the odds of a deal to 55 percent as Sprint may not consider its job cuts and cellphone business improvements enough to offset widening losses. It could change its mind in the first half of the year if any service changes in the winter don't bear fruit, Rollins explained.

A merger with T-Mobile would instantly put the combined entity back into competition with the two larger carriers, AT&T and Verizon. Sprint and T-Mobile have 48.3 million and 33.4 million cellphone customers respectively, but with 81.7 million combined as of this fall, a new entity would edge out AT&T's current base by 100,000 subscribers.

The two carriers have typically denied rumors of a merger, and T-Mobile is unofficially thought to be uninterested in Sprint for now.

Both providers have lost customers defecting to a larger network for either halo devices like the iPhone or Sprint's once poor customer support, but a merger would face multiple obstacles. Antitrust scrutiny is likely as the company would fuel government concerns about industry re-consolidation. Also, the two would have to resolve the split between their CDMA and GSM networks and eventually scrap one carrier's network and phone choices, most likely the North America-only Sprint network.

By Electronista Staff

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