Deal or No Deal: How the Sprint – T-Mobile Saga Will Impact Rural America
New analysis by CoBank explores various ways in which the proposed merger – now hanging in the balance – could affect rural telecom operators and consumers
DENVER (January 28, 2020) — With the fate of T-Mobile’s $26.5 billion bid to buy wireless rival Sprint currently in the hands of a district court judge in New York, the telecommunications industry is bracing to see how the situation unfolds. Several states and the District of Columbia have banded together to try to strike down the proposed deal, citing anti-trust concerns, among other factors.
A new report from CoBank’s Knowledge Exchange division looks at how the merger could impact rural telecom operators as well as rural residents, and what to expect if the deal is not approved. Numerous outcomes are at play depending upon how the courts rule. Either side – the companies and the state attorneys general – could appeal the judge’s decision. Still, the report says, in two of the most likely scenarios, the impacts for rural America could vary widely.
In the first scenario, should Sprint and T-Mobile merge and fulfill wireless coverage commitments, then rural consumers may see improved wireless coverage after the merger. In that case, the merger could also bring new revenue opportunities to rural telecom operators in the form of tower leases and fiber backhaul. However, there is a risk that the merger will negatively impact rural operators’ roaming revenue, which they can ill afford due to the health of their operations and their reliance on government support.
On the other hand, if the merger is blocked, rural America shouldn’t feel an immediate impact, said the report’s author, Jeff Johnston, lead economist, communications for CoBank.
“If this merger doesn’t happen, it should be business as usual until another major deal is announced,” Johnston said. “The cable operators are logical buyers of telecom assets, and if they acquire Sprint, rural operators and customers may be insulated from any major business or coverage risks.”
The full report, “How the Sprint – T-Mobile Saga Will Impact Rural America,” is available on cobank.com.
CoBank is a $136 billion cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 70,000 farmers, ranchers and other rural borrowers in 23 states around the country.
CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.