The failure of merger talks between Sprint and T-Mobile US could set the stage for an infrastructure investment war between the two.
During an earnings call, SoftBank CEO and Sprint chairman Masayoshi Son noted plans to boost Sprint’s annual network spending to between $5 billion to $6 billion. The sum would mark a substantial increase from a range of $3.5 billion to $4 billion seen in recent years and bring the US operator closer to parity with T-Mobile’s spending levels, though it would still be significantly behind the same figures at AT&T and Verizon.
BTIG analyst Walter Piecyk called out Son’s comments on Twitter.
— Walt Piecyk (@WaltBTIG) November 6, 2017
Son acknowledged it would be hard to crack the dominance of AT&T and Verizon in traditional mobile voice communications, but said Sprint is in prime position to capture share in the burgeoning IoT space by building more cell sites on the ground and deploying satellite-based stations through companies like OneWeb.
“Communication infrastructure is critical…so keeping control of Sprint allows us to build a future strategy for SoftBank Group,” Son said: “When it comes to IoT we may be in a far advanced position than the others because we have ARM.”
T-Mobile is also expected to kick its network plans into high gear. Jennifer Fritzsche, senior analyst at Wells Fargo Securities, predicted T-Mobile CTO Neville Ray will push even harder on deployments of the operator’s new 600MHz spectrum, which is part of T-Mobile’s 5G deployment strategy. Fritzsche also indicated T-Mobile will continue looking for opportunities to acquire high band spectrum for added capacity, but “as we know from this weekend’s events – they won’t overpay.”
T-Mobile already owns 200MHz of spectrum at 28GHz and 39GHz, and is planning to use those airwaves alongside its 600MHz assets to launch a nationwide 5G mobile network by 2020.
At Sprint, Son said the door is still open to other potential deals, but indicated rumoured suitor Charter wasn’t interested at last check. A break from all the buzz might also be in order, he said.
“We don’t need to accept bad terms, so maybe we can take some time to relax and think about it.”