Many years ago, there was an advertisement for Avis which says we try harder, they had to say this because they were the number two or three brand. In the world of business, being number one market share means higher profits. In an effort to increase profits, T-Mobile is merging with Sprint in which they hope to close in the first half of 2019 or next year. In an article by Greg Roumelitos of Reuters when you examine mergers, an important aspect is who controls the Board of Directors, in this case, the new President will be from T-Mobile and the owner of T-Mobile, Deutsche Telekom AG will have 42% of the shares and can nominate 9 of the 14 directors.

For Sprint which is owned by Softbank of Japan, it has tried a couple of times to merge and carries debt of $32 billion. Analysts noted Sprint’s growth came through discounting (volumes increase, not necessarily profitability), due to its debt lacks the scale needed to invest in the US network and to compete in a saturated market.

For consumers, the benefits are a higher capacity network, lower prices, create jobs and improve service in rural areas. The two biggest wireless players are Verizon Communications and AT&T, incidentally Verizon is a wonderful generator of free cash which goes into dividends. The new aspect for cell phones users is the 5G network and both Verizon and AT&T scope will be larger than the merger T-Mobile Sprint.

Linking to dividend paying stocks, while competition is important and needed, to be in the top 2 market share is more profitable and that can lead to many more elements. In the cell phone world, it leads to the ability to continually upgrade the network, to spend more money on good customer service and be innovative. Those elements bring more customers and the cycle continues to be strengthened every year. While it is great to watch and be informed of the other competitors, invest your money in easy methods to see success.

There are more questions than answers, till the next time – to raising questions.