T-Mobile And Sprint Merger: Will It Cost Customers More?

Customers of T-Mobile (TMUS) and Sprint (S) may catch a break if the Federal Communications Commission approves the deal to allow the two wireless carriers to merge.

The $26 billion merger would eliminate price increases for three years if approved. The deal was proposed by T-Mobile CEO John Legere in a note sent to FCC Chairman Ajit Pai.

The newly proposed deal blasts back at those that oppose the merger by saying that it would lead to higher prices which could harm consumers by taking one of the four major players out of the wireless space, USA Today reported.

"To remove any remaining doubt or concerns about New T-Mobile’s prices while we are combining our networks over the next three years, T-Mobile today is submitting to the Commission a commitment that I stand behind – a commitment that New T-Mobile will make available the same or better rate plans for our services as those offered today by T-Mobile or Sprint," Legere said in a letter to Pai.

"We believe this merger makes consumers better off, and we're willing to put our money where our mouth is. Period,” he added.

While prices would effectively stay the same, there could be changes in rates based on taxes, fees, or third-party surcharges which T-Mobile said in a separate letter to the FCC was "not within the control of New T-Mobile."

The merger between T-Mobile and Sprint is expected to create stronger competition with AT&T and Verizon, according to Legere and Marcelo Claure, Sprint executive chairman, especially with the battle of 5G heating up.

Claure told senators in June that Sprint would have a difficult time deploying 5G on its own. Together, the two companies could "to react, invest and compete harder and that will be good for consumers and innovation," he said.

The impact of the merger will be further explored by the U.S. House Energy & Commerce and Judiciary committees on Feb. 13 in a joint hearing. T-Mobile and Sprint will also need approval from the Justice Department to move forward with the merger.

T-Mobile said it is committed to bringing 5,600 new jobs to the industry by 2021 as well as building five new customer experience centers and expanding two current facilities.

Shares of T-Mobile were down 3.69 percent as of 4:04 p.m. ET on Tuesday, while shares of Sprint were down 6.09 percent.