Will the two small national wireless providers, namely, Sprint Corp. S and T-Mobile US Inc. TMUS merge their respective network assets to form a real estate investment trust (REIT)? Research firm Evercore ISI thinks so.In a recently published research note, the firm stated that the creation of a REIT through combining all network assets from Sprint and T-Mobile would achieve several benefits. A REIT is a company that owns or finances income-producing real estate
At present, the two U.S. telecom behemoths, viz., Verizon Communications Inc. VZ and AT&T Inc. T jointly command around 68% of market share, while the two smaller operators together control the remaining 32%.Evercore ISI believes that the creation of a REIT will help Sprint and T-Mobile US in three ways. It will (1) increase network investment, (2) reduce network costs and (3) lead to faster speeds on the back of a strong spectrum portfolio.Evercore ISI argued that a combination of Sprint and T-Mobile US will create a spectrum portfolio of 255 MHz, much larger than AT&T’s 147 MHz and Verizon’s 116 MHz. Sprint and T-Mobile US can then rent spectrum from the REIT.Also the newly formed company can rent out spectrum to a third party, especially to any mobile virtual network operator (MVNO). Notably, in Apr 2015, Google Inc. GOOGL launched an MVNO in partnership with both Sprint and T-Mobile US in order to provide WiFi service.
