1. THE ANTRISTRUST IMPLICATIONS OF THE T-MOBILE – SPTINT MERGER
Bocconi Students For Antitrust
THE ANTRISTRUST IMPLICATIONS
OF THE T-MOBILE – SPTINT MERGER
May 7th, 2018

2. WHY IT MATTERS US
ITALY

3. WHY IT MATTERS 516 MILLION USERS $76 BILLION MARKET CAP
$147.2 PER USER*
105 MILLION USERS
$20 BILLION MARKET CAP
$190 PER USER
272 MILLION USERS
$51 BILLION MARKET CAP
$188 PER USER
*All companies also have fixed-line users and other businesses. Since they have a similar weight for all the companies, the value per user is useful for relative comparison. The absolute values, though, should not be taken as indicative of actual value of a wireless user.

4. WHY IT MATTERS: SIZE 138 MILLION USERS $197 BILLION MARKET CAP
$1428 PER USER
149 MILLION USERS
$195 BILLION MARKET CAP
$1308 PER USER

5. MARKET OVERVIEW IN 2011
Sprint and T-Mobile suffered from lack of scale in:
Spectrum auctions
Network buildout
SG&A expenses
Verizon and AT&T gained substantial market share to the detriment of their smaller competitors

6. HOW WE GOT THERE: 2011: AT&T&T?

7. HOW WE GOT THERE
2012: JOHN LEGERE BECOMES CEO OF T-MOBILE

8. HOW WE GOT THERE
: PRICE WAR

9. HOW WE GOT THERE
: FROM UNDERDOG TO “ENVY OF THE WIRELESS WORLD”

10. IN THE MEANTIME ’S STRUGGLES WENT FROM BAD TO WORSE

11. WHERE WE ARE TODAY

12. + TRANSACTION DETAILS Announced April 29
T-Mobile US agrees to merge with Sprint in a $26 billion transaction ($59 billion including debt)
T-Mobile CEO will become CEO of the combined entity.
The combined entity will have an enterprise value (equity + debt) of $146 billion.
Deutsche Telekom will own 42% of the combined entity, SoftBank 27%. +

13. THE POTENTIAL SHOWDOWN+ VS

14. THE COMPANIES’ ARGUMENT

15. THE COMPANIES’ ARGUMENT

16. THE COMPANIES’ ARGUMENT
Much larger CAPEX capabilities in anticipation of the upcoming buildout of the 5G network.
Huge synergies thanks to elimination of redundancies. The companies estimate $6 billion in SYNERGIES per year + shared spectrum (frequencies) for better coverage.
Faster buildout of the 5G network to avoid falling behind CHINA.
The companies claim this can all be done:
Not increasing prices, actually DECREASING them.
ADDING, rather than firing NEW WORKERS. In its past merger with Metro PCS, T-Mobile has actually added many new workers.
MORE ROBUST COMPETITION

17. THE GOVERNMENT’S CONCERNS: TYPICAL HORIZONTAL MERGER
THE PAST HAS WORKED OUT WELL ENOUGH
Preventing AT&T and T-Mobile from merging ensured robust competition, which substantially brought down prices and improved quality.
The companies have shown that they can survive on their own.
THE FUTURE IS AT BEST NOT CERTAIN AND WE DON’T LIKE HORIZONTAL MERGERS
Less competition would likely entail HIGHER PRICES and LOWER QUALITY.
Less competition would likely entail FEWER JOBS.
4 PLAYERS ARE BETTER THAN 3

18. LASTLY… THE DISH WILD CARD
Dish is the largest satellite TV provider in the US.
Over the past few years the company has spent over $21 billion to purchase spectrum from the FCC.
At least 70% of the spectrum The spectrum will have to be put to use by March 2020, or it will have to be returned to the government for free.
This raises the prospects of a potential forth player.

19. SO… SHOULD THEY BE ALLOWED TO MERGE?