Partners: Sprint, T-Mobile MegaMerger Could Create A 'Viable' Third Wireless Carrier Option For Channel, Business Customers

Sprint and T-Mobile's $26 billion megamerger could create a powerful wireless rival to AT&T and Verizon that could benefit the channel and business customers, partners say.

"I'm hoping if the merger goes through, the two providers can combine in a way that will give Verizon and AT&T a run for their money," said Natasha Royer Coons, managing director of San Diego-based TeraNova Consulting Group, a Sprint and T-Mobile partner. "Hopefully, they will still be cost-competitive and build out their network assets to provide more coverage than the two were providing separately, and maybe leapfrog the competition with their combined spectrum in the 5G race."

The deal, which would combine the third and fourth largest wireless carriers in the nation, could open the door to a new enterprise alternative for the channel and business customers, said Rob Chamberlin, co-founder and chief revenue officer of DataXoom, a Walnut Creek, Calif.-based wireless solution provider that partners with both T-Mobile and Sprint.

"The merger will certainly benefit legacy Sprint or T-Mobile partners in that they will have a broader portfolio to sell to their client base. T-Mobile is making a strong push for mid-market and enterprise customers, and Sprint has a lot of expertise in this area," Chamberlin said.

[Related: It's Official: Sprint, T-Mobile Merge In Bid To Challenge Wireless Leaders AT&T, Verizon]

The jury is still out, however, on how well a Sprint/T-Mobile merger will go up against regulatory scrutiny from the Department of Justice (DoJ) and Federal Communications Commission (FCC) under the Trump administration. Many in the telecom industry have been under the impression that the Republican-led DoJ and FCC would be largely pro-merger, but the DoJ has so far come down against AT&T's proposed monster acquisition of Time Warner for $85 billion.

In fact, Sprint's stock tumbled down 14 percent Monday morning as analysts predicted steep regulatory hurdles facing the $26.5 billion mega merger.

The FCC, currently led by Chairman Ajit Pai, has previously voiced his support of merger and acquisition activity in the telecommunications space. A similar proposal for a tie-up between the two companies was abandoned in 2014 after facing opposition from the then Democrat-led FCC, led by Chairman Tom Wheeler, and the Department of Justice under the Obama administration.

T-Mobile and Sprint are promising a combined network that will offer an efficient, improved service at a lower price. T-Mobile's legacy network is based on GSM technology, while Sprint's is based on CDMA, which are two incompatible network technologies. Both carriers support LTE, and the companies have estimated it will take roughly three years to migrate all customers over to the T-Mobile network. Today, some popular Samsung smartphones and Apple iPhones on Sprint can run on the T-Mobile network, according to T-Mobile's Chief Operating Officer Mike Sievert.

While T-Mobile's popular "un-carrier" message has resonated strongly with consumers, business customers have been leery of adopting T-Mobile or Sprint for their mobility needs because of perceived issues around weaker coverage compared to AT&T and Verizon, according to partners.

TeraNova, a telecom expense and managed services provider that focuses on wireless solutions and partners with the four major U.S. carriers, is carrier-agnostic. "As trusted advisors, we have been sort of forced to look at other options because we were getting pushback on T-Mobile and Sprint from enterprise customers, even though the pricing was excellent," she said. "It's been hard to get enterprises to pay attention to the lower-cost carriers like T-Mobile and Sprint over the last couple of years."

Sprint and T-Mobile each own wireless spectrum that combined, could serve the company well in the creation of a 5G network that could rival what competitors AT&T and Verizon are building. T-Mobile owns a large portfolio of lower-band airwaves that can travel long distances and pass through walls, which the company has touted as an advantage as it relates to indoor connectivity. Sprint, on the other hand, has the largest U.S. holding of higher-band, 2.5-gigahertz spectrum that is capable of higher data capacity over limited distances.

"I would love a low cost, viable third carrier option for larger customers, but we'll have to see what that network convergence looks like over the next couple of years if the deal is passed," Coons said.

Both Sprint and T-Mobile have channel partner programs today. Sprint works with solution providers via its Business Solutions Program that offers wireless data products and services, as well as through its Global Wireline Business Unit for its wireline offerings. T-Mobile's business services unit, T-Mobile @Work, goes to market through the channel with its wireless solutions via partnerships with master agents.

"The key issue for partners will be which channel methodology will the combined entity embrace - mater agents, or a more traditional dealer channel. My guess is that Sprint moves to a more centralized model over time, mirroring what T-Mobile has done historically," said DataXoom's Chamberlin.

A spokesperson for Sprint said that while many details will still need to be ironed out, the Sprint channel "has direction, and we are moving full speed ahead."

T-Mobile did not return CRN's request for comment before publication time.

Sprint is majority owned by Japanese parent company SoftBank Group. German telecom company Deutsche Telekom currently owns a majority stake in U.S. wireless provider T-Mobile. Under the terms of the deal, Deutsche Telekom will own 42 percent of the combined company and will have voting and board control, while SotfBank will own 27 percent of the new company.

The combined company will retain both Sprint and T-Mobile's current headquarters, including T-Mobile's current home in Bellevue, Wash., as well as Sprint's headquarters in Overland Park, Kansas.