Sprint – T-Mobile Merger Takeaways

Hi, my name is Jeff Johnston, Lead
Communications Economist for CoBank. The verdict is in and a federal judge
has cleared the way for Sprint and T-Mobile to merge. There are lots of
moving parts to digest here, but we have boiled them down into three main
takeaways for rural America. First, if the new T-Mobile stays true to its merger
commitment which is to offer 5G coverage to 85 percent of rural Americans within
three years of the merger and 90 percent within six, it will have a positive
impact on bridging the digital divide. However, it’s important to note that not
all 5G wireless networks are the same and it’s quite possible that T-Mobile’s
rural 5G network speeds will be similar to what’s being offered today on 4G
networks. Secondly, some rural wireless operators could see their roaming
revenues decline, which would be problematic for operators who are
heavily reliant on this revenue stream. Sprint has been a major roaming customer
for rural wireless operators, whereas T-Mobile was not. This probably has to do
with T-Mobile’s superior rural coverage footprint according to Open Signal, a
mobile analytics company. With broader coverage in rural America from
company-owned infrastructure, T-Mobile would be less reliant on roaming
agreements as compared to Sprint, and these agreements will likely go away
when the two networks are consolidated. And lastly, we do think this merger has
some bright spots for rural America. For example, in order for the new T-Mobile
to meet its rural coverage requirements, it makes sense for them to partner with
rural operators for tower leases and back haul. We also see opportunities with
Dish who has emerged as a new nationwide wireless operator. Initially Dish will
use a network access wholesale agreement it negotiated with the new T-Mobile.
Basically Dish Wireless customers will be on T-Mobile’s network. However, we
think Dish will aggressively move away from this strategy and build its own
network to help drive margin expansion. Rural operators should be well-positioned
to support this effort with their wireless and fiber
infrastructure. Overall, we’re optimistic this merger will help bridge the digital
divide, but by no means do we think it’s going to be a silver bullet solution.
Rural America still needs billions and billions more in federal support before
the digital divide can ultimately be addressed.

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