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Legere Makes Convincing Pitch for T-Mo/Sprint Merger

By J. Sharpe Smith, Senior Editor

T-Mobile President and CEO John Legere answers questions during the T-Mobile Q4/FY 2017 Earnings Call on Thursday February 8, 2018, in New York. (Mark Von Holden/AP Images for T-Mobile)

John Legere always talks a good game. Sometimes it is tough separating the hype from reality, however. Last week, he continued to make his case for T-Mobile’s merger with Sprint, promising faster speeds, lower costs and increased employment in a blog. The merged company will invest nearly $40 billion and will have spectrum and capacity needed for a “broad and deep” nationwide 5G network, the T-Mobile CEO said. Rural coverage will be a big emphasis, he said, which should get the support of Congress.

He said the merged company will provide 5G speeds that are five times faster than the LTE speeds by 2021, while increasing LTE speeds.

“At full deployment the New T-Mobile will deliver fiber-like speeds. I’m talking about average speeds at a blazing 444 Mbps, covering about two-thirds of the country, with jaw-dropping peak speeds up to 4.1 Gbps!!” Legere said.

One of the merger tests that the New T-Mobile must pass is whether their marriage of the two wireless companies will reduce competition and increase costs to the consumer. Legere held that costs will actually go down.

“Analysis by renowned economist Dr. David Evans concludes that the building of the New T-Mobile 5G network will provoke competitive responses from Verizon and AT&T that will result in a decrease in the cost of a gigabit of up to 55 percent and over a 120 percent increase in mobile data supply for all wireless customers,” he said.

Addressing concerns that large swathes of America are unserved or underserved, he said that the merger will result in mobile broadband speeds in excess of 100 Mbps to roughly two-thirds of the population in just a few years and 90 percent of the country by 2024.

“This deal enables New T-Mobile to increase coverage in rural America and create more competition for wireless, broadband and beyond. Case in point: we estimate that 20-25 percent of those new broadband subscribers will be located in rural areas,” Legere said.

As opposed reducing jobs, which most mergers do through taking advantage of synergies, Legere plans on creating 3,000 direct jobs in the first year, increasing to more than 9,600 direct and indirect jobs by 2021 and more than 11,000 by 2024.

“Every day we will have more jobs as the New T-Mobile than the two stand-alone companies would have on their own,” he said. “As we build out our new 5G network and bring these services to all parts of the country we will create thousands of job opportunities.”

No one knows if the Federal Trade Commission will okay the merger, but Legere checks all the boxes that regulators will scrutinize. The merger will increase competition with Verizon and AT&T, he said, lowering consumer costs and establishing competition in rural areas, in places where it doesn’t exist today.  And increased employment would be the frosting on the cake. For the wireless infrastructure industry, the promise of a $40 billion capex infusion might be enough to take the sting out of the planned decrease in towers.

Sprint Turns Corner in LTE Build Out

It hasn’t been easy, but Sprint believes it has turned the corner in its efforts to modernize its network. The carrier is now on track to achieve 200 million LTE-covered pops by the end of the year, officials said during the third quarter earnings call. The carrier currently has more than 26,000 Network Vision sites on air compared with more than 20,000 reported in second quarter results.

Dan Hesse, Sprint CEO, joked that the Network Vision project is like the last pig’s brick house in the “Three Little Pigs” fable.

“It has been a very complex undertaking,” he said. “It has been very hard work to take down the Nextel network and rip out and replace the entire Sprint 3G network. We are finally turning the corner on this massive project and can see the light at the end of the tunnel.”  Hesse added that the carrier will experience Network Vision construction pressures until mid-2014.

Network Vision is a flexible platform that is capable of running LTE in three spectrum bands with the network architecture to add more frequencies in the future.

Steve Elfman, Sprint president, network, technology and operations, said that construction is complete or underway on more than 35,000 sites, which is 90 percent of the carrier’s sites. LTE has been launched in 230 markets so far.

Sprint’s plan to build a multi-band LTE network includes the 1.9 GHz band, overlaid by 800 MHz and 2.5 GHz frequencies. Modernization of the 1.9 GHz network is expected to be completed by mid-2014.

“We expect to use a capital efficient mix of various bands depending on geography and capacity needs,” Elfman said.

Sprint continues to free up 800 MHz frequencies following the Nextel shutdown, which improves network performance. The carrier began voice service on the 800 MHz band in the first quarter and now has sites on the air in two-thirds of its markets.

“We also have 40 percent of our customer base using 800 MHz voice-capable handsets,” Elfman said. “We are starting to turn up 800 MHz LTE radios in markets where we have spectrum rebanding complete.”

The third layer of the network will be 2.5 GHz spectrum, which Sprint acquired from Clearwire. It will be deployed in urban markets initially. Sprint expects to cover 100 million pops with 2.5 GHz by the end of 2014.

“Our approach will be to densify the urban markets first to get the speed and capacity in those areas, eventually moving nationwide,” Elfman said. “We plan to be very aggressive next year in our [2.5 GHz] deployment, not only with our Clearwire build but with our own sites, macro and smaller.”

Sprint Spark Springs Forward

Late in October, Hesse announced the future rollout of “Sprint Spark,” which will be capable 50-60 megabits per second peak speeds today with the potential of more than 2 gigabits per second per sector of over-the-air speed.

Sprint plans to deploy Sprint Spark in about 100 of top metro areas during the next three years, with initial availability are New York, Los Angeles, Chicago, Tampa and Miami. Sprint expects to cover 100 million pops with Sprint Spark by the end of 2014.

Sprint Spark achieves its speed by combining 4G FDD1-LTE at 800 MHz and 1.9 GHz and TDD1-LTE at 2.5 GHz spectrum, TDD-LTE technology (2.5GHz), and carrier aggregation in the 2.5GHz band. These spectrum assets, technology and architecture are designed to deliver a seamless customer experience via tri-band wireless devices. The tri-band devices will support active hand offs between 800 MHz, 1.9 GHz and 2.5 GHz, allowing data session continuity as the device moves between spectrum bands.

The first smartphones with Sprint Spark capability are scheduled for customer availability this month.