SoftBank CEO Up For ‘Massive Price War’ Against Verizon And AT&T

The U.S. wireless industry might get shaken up if SoftBank and Sprint have its way. Over the past few months rumors have been going around about a possible merger between Sprint and T-Mobile, SoftBank already has a controlling stake in Sprint. Top executives from both the parent company and the carrier have reportedly been courting regulators and taking their temperature, trying to ascertain if a takeover bid will be blocked based on regulatory concerns. The idea is that Sprint and T-Mobile together will be able to launch an effective competition against Verizon and AT&T. In an interview with Charlie Rose, SoftBank CEO Masayoshi Son said that he’d like to have “the real fight” for supremacy in this arena and that when that becomes possible, he’d wage a “more massive price war” against the two behemoths.

Its possible that the strategy Son has in mind is to undercut both Verizon and AT&T on price. While this would reduce revenue in the short term, it would maximize growth and market share over the long term. Even combining Sprint and T-Mobile’s entire user base doesn’t bring it close to what AT&T holds, and Verizon sits even further than that. If the tail enders of the U.S. wireless industry get together, the two behemoths could get a run for their money.

But its not like regulators haven’t blocked a similar bid before. In 2011, AT&T agreed to acquire T-Mobile for $39 billion only for the deal to be shot down by regulators. One could make the case that AT&T would have had an unfair advantage due to its already strong position, had the deal gone through, and that the outcome won’t be the same with Sprint. Regulators held back then that four national carriers are healthy for maintaining competition in the U.S. wireless industry, if their beliefs haven’t been shaken, then its unlikely that Sprint and T-Mobile will ever get together.

Adnan Farooqui
Categories: Cellphones
Tags: Sprint, T-Mobile