Without T-Mobile US, Sprint Will Not Rearrange U.S. Market Share

Must Sprint acquire T-Mobile US to have any hope of dislodging either AT&T Mobility or Verizon Wireless from their current positions at the top of the U.S. mobile market? SoftBank CEO Maysaoshi Son has argued that is the case.

Some evidence would suggest he is correct. When SoftBank purchased the Vodafone assets in Japan in 2006, that operation was the number-three provider, as is Sprint in the U.S. market.

Today, SoftBank has about 20 percent share of market. But keep in mind that Vodafone, when purchased by SoftBank, had market share of about 17 percent. In other words, the net swing in market share since 2006 (eight years) has been about three points.

Granted, SoftBank is growing at the expense of KDDI and NTT. But that is a rather long, slow grind, not a whipsaw and dramatic share shift.

“We need a certain scale, but once we have enough scale to have a level fight, OK. It’s a three-heavyweight fight. If I can have a real fight, I go in more massive price war, a technology war,” Son said on the Charlie Rose TV show.

Son said he was willing to postpone profit to gain market share, using price cuts to gain market share, the same strategy used by SoftBank in Japan to create Japan’s fastest growing mobile service provider.

Still, SoftBank’s own experience in the Japanese market suggests what could be needed to make more than marginal gains.

Without T-Mobile US assets, Sprint cannot rapidly and massively challenge either firm, Son has said. On the other hand, Son believes Sprint, as a stand-alone company, can improve its position. But it cannot hope to dislodge either AT&T Mobility or Verizon Wireless without more scale.

That statement probably should be read, as should statements about a merger being necessary to improve high speed access for schools, as “spin” intended to achieve a business objective, not a fundamental of truth about company strategy.

On the other hand, SoftBank’s own history in the Japanese market, and the recent experience of Illiad’s Free Mobile in France, might suggest that even a fearsome attack by a number-three or number-four service provider can succeed only to a certain extent.