Originally published: December 6, 2012
Last updated: December 6, 2012 - 8:25pm
Softbank's planned $20.1 billion investment in Sprint Nextel and T-Mobile USA's intended merger with MetroPCS are "significant transactions," but that does not mean the deals will alter the competitive landscape in the U.S. wireless industry, according to Standard & Poor's Rating Services.
S&P said Sprint's agreement to give up a 70 percent stake in itself in exchange for Softbank's multi-billion-dollar investment resulted from future financing needs rather than efforts to build scale or leverage synergies. Any competitive benefits of the Sprint-Softbank combination, such as cost savings on handsets and network equipment, "would likely take time to emerge, and would likely result from Sprint's greater financial flexibility allowing consistently higher investment in the business," said the firm. The combination of MetroPCS and T-Mobile is being viewed a bit differently in that it is a merger of rivals, and the combined company could benefit from having larger scale, which would give it greater operating efficiency, better equipment pricing and more spectrum to accommodate an LTE upgrade, said S&P.