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T-Mobile US exec mulls merger with rival Sprint

Only a larger company can take on Verizon, AT&T, moneyman says

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The chief finance officer of US wireless carrier T-Mobile says further consolidation in the US mobile industry is inevitable and that a merger with Sprint would make a lot of sense.

"It's the ultimate logical combination," T-Mobile CFO Braxton Carter told Reuters at the Goldman Sachs Communacopia conference in New York City on Wednesday, though he wouldn't say whether T-Mobile and Sprint had actually discussed the idea.

Sprint is currently the third largest mobile carrier in the US with around 53 million subscribers, according to figures from FierceWireless. T-Mobile is in fourth place with 44 million subscribers, though it recently saw subscriptions surge after debuting aggressively priced, contract-free plan options and a device upgrade program.

Both companies have recently tried to boost share by acquiring smaller competitors. T-Mobile snapped up MetroPCS in April, while Sprint bought out Clearwire in June.

But both companies are still distant competitors to the "Big Two" US wireless carriers, Verizon and AT&T, each of which claims twice as many subscribers as either Sprint or T-Mobile. Carter went as far as to describe the US mobile market as a "duopoly."

Fusing Sprint and T-Mobile into a third wireless behemoth – one with a subscriber base nearly twice as large as that of either company on its own – would be one way to challenge the Big Two's market dominance, or as Carter put it, "create a more competitive environment."

It's unclear, however, whether US regulators would allow such a merger to go forward. The Federal Communications Commission put the kibosh on a proposed merger between T-Mobile and AT&T in 2011, leading many in the industry to surmise that regulators intend to maintain the status quo of four major mobile operators.

But while Carter acknowledged that the current regulatory environment is "tough," he said T-Mobile rejects the idea that the FCC will never be convinced to allow more wireless carriers to merge.

"We think it's not a question of if but when that there's further consolidation in our industry," he said. ®

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