July 12, 2014 3:29 am JST

Regulatory hurdles not deterring SoftBank's pursuit of T-Mobile

TOKYO -- With Sprint slipping in competition in the U.S. mobile carrier market, achieving scale through a merger with T-Mobile US has become crucial for the No. 3 player. And this sense of urgency is driving parent SoftBank to go all-out for the deal despite regulatory challenges.  

     SoftBank and Deutsche Telekom have reached a basic agreement for a merger between Sprint and T-Mobile, but the deal still needs approval from U.S. regulatory agencies. The Federal Communications Commission will examine the proposal from a communications policy standpoint while the Department of Justice will scrutinize it for antitrust issues.

     SoftBank chief Masayoshi Son has been actively lobbying in Washington to win over regulators, which appear content to keep the market dominated by four players.

     Sprint, acquired for $21.6 billion last year, continues to struggle. Sprint was the only one of the top four U.S. carriers to log a net decrease in subscribers over the January-March quarter. Having been less aggressive to invest in its wireless network, the company has not been able to shed the perception that its network is slow and has poor coverage.

     Meanwhile, T-Mobile enjoyed the largest net increase in subscribers over the three-month period. Its low rates and offer to shoulder cancellation fees for customers switching from rivals proved effective. Yet heavy promotional expenses resulted in net losses, making its future prospects somewhat uncertain.

     The combined customer base of Sprint and fourth-ranked T-Mobile roughly equals those of the two industry titans.