Without a merger, T-Mobile, Sprint, and Dish will fare very differently

On January 15, closing arguments will be heard in the lawsuit brought by Attorney Generals from 15 states and the District of Columbia to block the T-Mobile-Sprint merger.  In early February, we can expect to learn Judge Victor Marrero’s decision in the case.  While it seems like everyone these days is giving new odds on the likelihood the merger will go through, with and without additional conditions attached, are the three firms with the most to gain from the merger, T-Mobile, Sprint, and Dish, likely to feel the loss equally if the merger does not go through?  I don’t think so. 

While T-Mobile has spent a tremendous amount of money and manpower to get the $26 billion deal approved by all regulators, its business is thriving as it reported a gain of 1 million post-paid subscribers in each of the last two quarters.  And, although John Legere will be out as CEO effective April 30^th, the firm’s “uncarrier” approach to the market and its multiple content and wholesale distribution partnership deals will continue to serve it well as it acquires the additional spectrum it needs to accelerate 5G deployment.

The same cannot be said for Sprint and Dish.  These companies need this deal or another to be financially viable in the years ahead.  Both firms reported subscriber losses in the third quarter of 2019 (4Q2019 #s are not available yet) in their most profitable business segments.  According to the Leichtman Research Group, Dish lost 66K subscribers.  During the same period, Sprint shed 26,000 post-paid subscribers, while its competitors all added subscribers.  (Sprint also just announced plans to discontinue its Virgin Mobile service; rolling customers over to its Boost Mobile service.)  If the merger does not go through, look for these two firms to quickly seek out other media firms to merge with or sell assets to.  First on the list for both may very well be the payTV providers, Comcast and Charter.