A top Sprint executive thought a merger with T-Mobile US could lead to price increases across the wireless industry, contrary to public statements by the companies that prices will drop, according to evidence presented by states suing to block the deal on antitrust grounds.
Roger Sole, Sprint’s chief marketing officer, said in a text message in 2017 to Marcelo Claure, the carrier’s chief executive officer at the time, that the deal could mean an increase of $5 a month in average revenue per subscriber. Industry leaders AT&T and Verizon Communications would also benefit with fewer players in the market, he said.
“And they DO NOT pay anything for this,” Sole wrote to Claure. “The benefit of a consolidated market.”
Sole, the first witness in a trial that began Monday in federal court in Manhattan over the $26.5 billion merger, downplayed the comments made to Claure about the price increase, testifying that he was only describing a hypothetical scenario. Claure, who is now Sprint’s chairman, didn’t respond to the text, Sole testified.
In his deposition before the trial, Sole said he was offering “the thought that eventually there could be price increases very far down the road.”
State attorneys general led by New York and California argue the deal should be blocked because it will reduce competition in the wireless market and lead to higher prices for consumers, even though the companies publicly claim prices will go down because network capacity will increase.
The trial is expected to last two weeks and will include testimony from T-Mobile Chief Executive Officer John Legere, Claure and Dish Network Chairman Charlie Ergen. Under a plan approved by U.S. regulators, Dish will buy assets from Sprint and T-Mobile to set up a new wireless carrier.
Tim Hoettges, the chairman of T-Mobile’s majority owner, Deutsche Telekom AG, began testifying Monday and will resume Tuesday.
During testimony by Hoettges, the states’ attorney, Glenn Pomerantz, sought to show that T-Mobile was able to turn the company’s fortunes around without a major merger, overcoming Sprint to become the No. 3 carrier in the U.S.
The states also presented evidence that Sprint and T-Mobile competed fiercely with one another by lowering prices and offering unlimited data plans. At one point, when T-Mobile offered customers a buy-one-get-one-free phone plan, Claure told Sole: “Let’s match it. We have no choice. Go for it.”