T-Mobile Exec Paints Sprint Merger as Existential Necessity

MANHATTAN (CN) – A German T-Mobile executive insisted in federal court Tuesday that the company’s proposed $26.5 billion merger with Sprint is essential to build a wireless network that can make the largest two top U.S. carriers take notice.

A woman using a cellphone walks past T-Mobile and Sprint stores on April 27, 2010, in New York. (AP Photo/Mark Lennihan)

While critics and coalition of states fear that the merger of the country’s third- and fourth-largest mobile wireless companies would be anti-competitive and raise prices for consumers, Tim Hoettges testified Tuesday that the best way to drive a competitive wireless market against the dominating companies, AT&T and Verizon, is to build extensive national infrastructure and offer customers attractive prices.

German-based Deutsche Telekom has a controlling stake in T-Mobile.

“How can we challenge the big guys?” asked Hoettges, chairman and chief executive of Deutsche Telekom, the controlling shareholder of T-Mobile.

“If you want to build a 5G network in this country, you need spectrum,” Hottges said this morning, referring to the electromagnetic frequency bands allocated by the U.S. Federal Communications Commission for telecommunications.

Hoettges said that Deutsche Telekom has always seen the acquisition of spectrum in America as “superior solution” since as far back 2011 when the company started strategic assessment.

“We will have more spectrum than AT&T and Verizon,” Hoettges said Tuesday of the scope of the combined company. “The only way of having this capacity, is by making it cheaper.”

Hoettges promised that the 5G high speed internet network planned by the combined company will serve 99% of the United States in six years.

“What we want to build is a superior infrastructure for this country,” he said.

Deutsche Telekom will remain in control of the board of the combined company, with eight out of 14 seats of the new board.

Hoetgess remarked that T-Mobile’s reinvigorated last decade as the “Un-Carrier” brand was one of the most successful turnarounds in telecommunications history, citing marketing innovations like pushing unlimited wireless plans earlier than other carriers and offering attractive promotions with Netflix and iPhones.

Pressed by the attorney representing the state of California, Glenn Pomerantz, on the risks presented by integrating Sprint’s existing wireless network with T-Mobile’s, the unflappable German executive insisted that it would be easier than their integration of the prepaid retail wireless brand MetroPCS. “Our plan is to close down one network, the Sprint network and use our network,” Hoettges said. “Nevertheless, you’re right … every step forward is a challenge in life,” he added philosophically.

T-Mobile and Sprint had announced their all-stock merger agreement on April 29, 2018. As part of the deal negotiated with the Department of Justice, Sprint will divest Boost Mobile, Virgin Mobile and Sprint prepaid to the satellite television company Dish Network.

T-Mobile and Sprint will also give Dish access to 20,000 cell sites and to T-Mobile’s network for seven years, during which time Dish will work on constructing its own brand new “supercharged” 5G network.

Hoettges said that Dish will be building significant competition in the marketplace and will see profits from day one onward with “effectively unlimited access” to T-Mobile’s network  “at rock bottom prices.”

The trial is expected to include testimony from other executives including T-Mobile’s departing, social-media savvy CEO John Legere; T-Mobile President Mike Seivert, who will succeed Legere next year and manage merger integrations; and Marcelo Claure, the executive chairman of the board of Sprint Corp.

Seeking an efficient use of the two-week trial’s time, U.S. District Judge Victor Marrero, a Clinton appointee, opted to skip opening statements Monday and asked the parties to trim their witness lists, remarking that he didn’t want to be “beaten over the head” with expert testimony.

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