What Next if Sprint Can't Buy T-Mobile US?

It’s starting to look as though the Comcast bid to buy Time Warner Cable will face far fewer hurdles than the Sprint bid to buy T-Mobile US. The key issue for Comcast is its gaining a 30 percent share of the cable TV market. But that threshold long has been an informal limit, and once was a formal limit.

Yes, the market for triple-play services would become more concentrated, but not at a level above historic limits desired by regulators.

Sprint faces bigger opposition. The Department of Justice already believes the U.S. mobile market is overly concentrated.

The key issue for Sprint is that by buying T-Mobile US, the number of leading U.S. mobile providers would be reduced to three, from four. Since the U.S. Department of Justice already has signaled its belief that would be unwelcome, Sprint faces huge resistance.

If you assume Sprint continues to desire greater heft in the U.S. mobile market, what might its options be, if a minimum of four mobile service providers remains the case, at least for the moment?

The wild card remains Dish Network, assuming Dish and DirecTV do not attempt a merger themselves. To be sure, Sprint does not need additional spectrum so much as it needs more customers.

Dish has lots of spectrum, but no mobile customers. But Dish does have about 14.1 million video customers, each representing about $80 a month in average revenue per account. If one assumes that much of the U.S. video entertainment business will “go mobile,” that would be a strategic asset.

To be sure, that route would not immediately do much to change market share dynamics in the core U.S. mobile service market, something Sprint would prefer. 

But if its bid to acquire T-Mobile US is rejected, or if the attempt is not made, that is a situation Sprint will have to deal with, in any case.

Nor, even if Sprint or T-Mobile US should find itself weakening in the core U.S. mobile market, would that necessarily make easier an eventual merger between Sprint and T-Mobile US. 

It could well happen that a third party jumps in, perhaps not so much with the intent of competing in the “mobile market,” but actually to use the assets as the foundation for connected devices and apps.