Commentary

T-Mobile And Sprint Hang Up On Each Other ... Again

After courting each other for longer than Robin Hood and Maid Marian, Sprint and T-Mobile called off merger talks over the weekend, citing their inability “to find mutually agreeable terms.” A combined company would have had more than 130 million U.S. subscribers, behind Verizon and AT&T, point out Reuters’s Liana B. Baker and Anjali Athavaley.

But “the companies’ unusual step of making a joint announcement on the canceled negotiations could indicate they still recognize the merits of a merger, keeping the door open for potential future talks,” they speculate. 

That’s after four years of on-again, off-again discussions, report Mark Davis, Max Londberg and Lynn Horsley in the Kansas City Star, “offering short-term job relief to 6,000 Kansas City area [Sprint] employees but casting doubt over the company’s future.”

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They go on to point out that “one combined wireless company would have needed to invest less in its network than the two competing companies spend separately.”

Also, “a combined carrier would have needed fewer employees than the 78,000 Sprint and T-Mobile employ now,” with Sprint likely being hit hardest. “A merger was expected to put T-Mobile’s executives in charge, given their success in turning that company into the fastest growing U.S. wireless carrier,” they posit.

Never at a loss for fighting words, T-Mobile U.S. president and CEO John Legere rued the collapse of the talks but said in a statement: “Going forward, T-Mobile will continue disrupting this industry and bringing our proven Un-carrier strategy to more customers and new categories — ultimately redefining the mobile Internet as we know it.”

“The final blow to the latest round of talks came Saturday night in Tokyo, when Tim Höttges, the chief executive of [T-Mobile’s parent company] Deutsche Telekom, met at the Tokyo home of SoftBank’s founder, Masayoshi Son, according to a person briefed on the matter. There, Mr. Höttges delivered to Mr. Son and Sprint’s chief executive, Marcelo Claure, new terms for a merger of the American companies,” relates Michael J. de la Merced for the New York Times.

“Mr. Son and Mr. Claure ultimately rejected the plan because it did not give SoftBank and Sprint enough control over the combined entity, people briefed on the discussions said,” de la Merced continues.

“Good luck, Sprint Corp. You're going to need it,” writesBloomberg “Gadfly” columnist Tara Lachapelle. “… Investors are being asked to put their trust in the nebulous vision of a billionaire halfway across the world who's talking in terms of centuries, while they can’t even rest assured of Sprint's operations quarter to quarter.” 

Pointing out that it has managed to stay afloat “by slashing costs and offering promotions (lately desperate ones) to attract customers, even as its brand value eroded,” Lachapelle forecasts that Sprint’s stock price is going to take a big hit today,

It has, in fact, been plunging in pre-market trading, down 11.5%, The Street’s Lisa Botter reports at 5:57 a.m.

Over in Bloomberg Technology, a headline suggests that “SoftBank's Audacious CEO Has Hard Choices to Make on Sprint.” Pavel Alpeyev and Scott Moritz write: “The harsh reality for Son now is that Sprint can’t make it on its own. [It] hasn’t had a profitable year in a decade and carries a debt load of $38 billion. About half of that is coming due in the next four years, just as Sprint will have to invest billions in next-generation wireless technology to compete with larger rivals.”

But, “on a small positive note, Sprint on Sunday announced a deal with Altice USA,” the subsidiary of the French company that bought CableVision, Lachapelle points out.

“Under the agreement, Altice USA will have ‘full’ use of Sprint's network for nationwide voice and data service. In return, Altice will use its broadband network to help Sprint ‘densify’ its coverage as it adds legions of small cell sites,” Jon Fingas explains for Engadget.

Also, “SoftBank, which already owns about 82% of Sprint, plans to increase its stake to up to 85%,” reports Katie Roof for TechCrunch. “Masayoshi Son, CEO of SoftBank Group and chairman of Sprint, said in a statement that, “we are entering an era where billions of new connected devices and sensors will come online throughout the United States. Continuing to own a world-class mobile network is central to our vision of ubiquitous connectivity.”

Ubiquitous connectivity. Who knew, a mere decade or so ago, that that’s what we’d be aspiring to? And after that’s accomplished? We’ll be connecting to robots with IQs of 10,000. What’s a failed merger in the face of all that’s to come?

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