The pricing plan of T-Mobile US Inc could possibly obstruct the takeover attempt of the company by Sprint Corp since regulators in the US want to keep a maverick wireless operator that lower rates to subscribers, Bloomberg reported. With its cheap pricing strategy, T-Mobile has lured customers from its bigger competitors. This has helped foster the competition sought by the Justice Department over two years ago when it blocked the takeover of AT&T Inc for T-Mobile in court, the report said.
Medley Global Advisors Analyst Jeff Silva told Bloomberg that regulators would not want this market dynamic to be disturbed if Sprint and T-Mobile come to an acquisition agreement.
In an interview, Silva said an offer from Sprint for T-Mobile will not be seen favorably by federal regulators and antitrust officials, adding that political appetite does not exist for seeing the national field narrowed by one, particularly one to be taken out is the maverick carrier.
T-Mobile Chief Executive Officer John Legere has chipped away at his rivals with more affordable plans, faster upgrade privileges and free international roaming since leading the company in 2012. Last quarter, T-Mobile gained 869,000 monthly subscribers and told its investors that for every subscriber that AT&T loses, T-Mobile gains two, Bloomberg reported.
Meanwhile, Dallas-based AT&T has also decided to play T-Mobile's game by giving its own promotions. This month, the carrier started offering T-Mobile customers credits of up to $450 for devices and services for every line that they change, the report said.
In an interview on Bloomberg TV on January 8, Legere was quoted as saying about his rivals, "These folks are fat, dumb and happy. These guys don't have the cost structure to compete or the speed to move. They're going to have to wake up."
The daring of the T-Mobile CEO also enhances the firm's reputation for shaking up its rivals, the report said.
Join the Conversation