T-Mobile’s John Legere Caters to Trump’s China Fears With 5G Ambitions


Sue Marek
May 2, 2018

It’s clear from the tone that T-Mobile’s executive team took with investors during the company’s first quarter earnings call this week that they plan to overcome any skepticism about the company’s proposed acquisition of Sprint by appealing to the Trump Administration’s fears that China may be taking a lead over the U.S. in technology and innovation.

In his opening remarks to investors, T-Mobile CEO John Legere emphasized this strategy: “Once regulators learn, they will agree this is the right move at the right time for America.”

Legere also noted that while T-Mobile can still build a 5G network without acquiring Sprint, that network will not be as powerful, nor have the “depth and breadth” of 5G coverage that the combined 5G network will have. He added that the combined network “will change the country’s competitiveness in 5G.”

T-Mobile’s executive team has been on a fast-paced trip to Washington, D.C. Legere said on the call Tuesday afternoon that since the deal was announced Sunday they had already had meetings with the FCC and other government officials and were planning to meet with the Department of Justice before the trip was over.

At least one top government official had a positive reaction to the deal. Reuters reported that U.S. Commerce Secretary Wilbur Ross told CNBC that he believes the proposed deal is interesting and “it would propel Verizon and AT&T into more active pursuit of 5G,” noting that the U.S. needs this 5G network for defense and commercial purposes.

Bundled Plan
Interestingly, it sounds as if T-Mobile’s bigger strategy beyond just deploying a nationwide 5G mobile network is to offer a bundled plan to consumers that combines broadband, TV, and wireless service. T-Mobile COO Mike Sievert said that the combined entity would be able to offer nationwide speeds of 450 Mb/s, making it an effective home broadband competitor. He also noted that T-Mobile’s recent acquisition of Layer3 TV sets it up to deliver content.

But T-Mobile executives seem acutely aware that they have a challenge ahead. Particularly when it comes to convincing investors that this deal will result in operating efficiencies while at the same time job creation. Sievert said that the new T-Mobile will employ more people from day one. And it will do so because even though the merged company will eliminate redundant retail stores, it will also open more stores, particularly in rural areas where neither company currently has retail outlets. And it will also employ more people in the remaining stores to address the larger customer base that will result from combining the two companies.

But Don’t Forget the Core
While T-Mobile executives are busy touting the importance of creating a nationwide 5G network that has extensive coverage and capacity, some analysts are worried that all this focus on the merger will stop both T-Mobile and Sprint from investing in their 5G core network, which is critical to operations.

The merger is supposed to be approved no later than early 2019, but that still means a lot of prep work needs to be done now for that 5G network to work in 2019.

“Being first to market with 5G is helped by accelerating the allocation of more mid-band spectrum and by relaxing regulations that delay new network rollouts,” said Michael Thelander, analyst with Signals Research Group, in a research note. “Getting the 5G core network in place is also critical, and the merger could delay this activity for the new T-Mobile.”