The T-Mobile/Sprint merger has been a hot topic lately. The deal has yet to be made, but in a new report by Re/code, maybe skipping out on Sprint and hooking up with French Communications Firm Iliad will be a much better route to take. “The difficulty in getting a deal approved for Iliad over Sprint is akin to the difference between heating a Hot Pocket and making a soufflé,” said the report on Re/Code. What makes it much easier for T-Mobile to be bought by Iliad is that antitrust regulators wouldn’t have a problem with the French company because they do not have any U.S. telecom assets. In addition, T-Mobile wouldn’t lower the the number of large carriers from four to three.
The Federal Communications Commission will indeed make sure that the deal follows foreign ownership limits. Either way, being foreign owned wouldn’t really matter as well since T-Mobile’s current owner is German telecommunications giant Deutsche Telekom. Having the French owned form Iliad buy T-Mobile wouldn’t spark an uproar like an acquisition from Chinese or Russian company that has ties with the government. According to telecommunications analyst Paul Gallant, “Unless we’re worried about an invasion from France I don’t think this would be held up on foreign ownership issues.” He later added, “Sprint/T-Mobile raises classic antitrust red flags, Iliad raises none and their history of disruption in France would probably be viewed positively by regulators.”
Just three years ago the Justice Department and FCC stopped AT&T from acquiring T-Mobile. Their reasons were over worries that the deal would decrease wireless competition. The same thing can be seen with Sprint acquiring T-Mobile — that acquisition will lower the number of large carriers. Until Softbank can come up with enough reasons to make regulators view the deal as a positive thing, the acquisition may never happen. Telecom analyst Craig Moffett mentioned in a research note that “We still believe a Sprint/T-Mobile merger is overwhelmingly likely to be blocked.”
The Sprint/T-Mobile merger just has way too many problems. If French Communication Firm Iliad goes in for the acquisition, than we will remain with four large wireless carriers. The thoughts of decreased wireless competition will be thrown out the window and everyone will be happy. Share your thoughts with us on what you think should be done between Softbank, T-Mobile, and Iliad. Will an acquisition from a French Company be what we need?
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