Given track records, it should be T-Mobile trying to buy Sprint
The rest of the landscape was a bunch of smaller carriers. There were larger regional carriers that had agreements to enable national service, like GTE, ALLTEL, AirTouch, Telecorp, Tritel, and US Cellular. Sprint had smaller operations before it built out its PCS spectrum.
The late 1990s brought rapid consolidation of the wireless sector in the US, BellSouth and SBC (who formed Cingular) bought AT&T Wireless forming the Cingular brand. Bell Atlantic, GTE, AirTouch, and PrimeCo merged to create Verizon and Verizon Wireless. Sprint would buy smaller carriers like 360 Communications, US Unwired and later Nextel.
Deutsche Telekom would lead the fray to create the T-Mobile brand in the US by acquiring VoiceStream, Omnipoint, Aerial, Powertel and SunCom assets, creating the fourth largest carrier in the US.
Sprint and T-Mobile have essentially been fighting over leftovers from Verizon and AT&T for several years. Only until recently, both carriers seemed to be in a permanent death spiral of subscriber losses. T-Mobile was finally able to reverse that trend by introducing truly radical changes in the way it does business and the rest of the industry has literally been playing catch-up ever since. It makes me scratch my head as to why Deutsche Telekom would be so eager to want to sell off what may be its only growth market.
In 2004, Sprint made the move to buy Nextel for $36 billion. The idea was that Sprint would find a way to merge the incompatible CDMA and iDEN wireless technologies, enabling push-to-talk connectivity no matter what and enhancing spectrum holdings in several markets. We know how that story ended, earlier this year, what was left of the Nextel network was shut down so the spectrum could be farmed for use on Sprints main services. Then there was the formation of Clearwire and the rush to bring “4G” to the market via WiMAX.
Three Words and One Word
Let us pretend for a moment that a merger between Sprint and T-Mobile is inevitable and the totally incompatible networks are not an issue. Given the track record between the two companies, who is better off running the show? Sprint’s CEO Dan Hesse has done a fine job of stemming the bleeding from Sprint given the difficult circumstances the carrier put itself in, but facts are facts, Sprint is not in a position to lead in any dance. Don’t believe me? I have three words for you: Nextel, Clearwire and WiMAX.
T-Mobile, by contrast, has been quite a bit more nimble and far more wise in its decision making process. Granted, the carrier remains smaller, but CEO John Legere in the 14 months he has been in that position, has almost literally turned the tables not just for itself, but for the entire industry in the United States. Sprint has no such claim, not by a long shot.
If I were Masayoshi Son, I would be quite concerned about forking over $20 billion more after digging out $20 billion just to get in the game in the first place. He should look not only at the effect the debt burden Sprint was carrying, but he should look very carefully at Sprint’s perfect track record of failure when it comes to working through incompatible network platforms. Nextel was a bust. Clearwire was a bust. WiMAX was a bust. Since I’m on a roll here, I’ll point out that the LightSquared deal was a bust too – granted, that one wasn’t really Sprint’s fault, but it shows an inability to pick a winner.
Forgive me for being a cynic, but a potential Sprint acquisition of T-Mobile looks like it could only have one outcome: disaster.
T-Mobile was also able to make the most of a difficult playing field, yes the AT&T break-up fee helped it, but in the grand scheme it was not a dump truck of goodies. It was $3 billion in cash, some spectrum and roaming agreements. No one can deny, 2013 was T-Mobile’s year.
The problem with Sprint taking on such an audacious plan is not the act of the merger itself, but the talent that would be running the show behind the scenes, and that should worry people, since it is perfectly reasonable to expect that mindset and talent pool still exists to some extent within Sprint. When the skeletons of Nextel, Clearwire and the flawed rollout of WiMAX are not even hiding in a closet, Masayoshi Son might want to take a moment to reflect on that and gauge if the money and time is well spent.
It's How You Use It
If Son wants to see an early return on his investment, let SoftBank sell off some of its stake in Sprint, allow SoftBank be a 45% (or 49.9%) holder while T-Mobile takes over 55% (or 50.1%), not unlike the initial Verizon/Vodafone arrangement and bring John Legere’s dynamic leadership to the front of the line. If debt concerns and break-up fees are already causing consternation about a takeover of T-Mobile, then that means it is already time to push away from the table, call it a day, and get to work on Sprint’s new strategy. Anything else is a distraction.
1. Zayuh24 (Posts: 148; Member since: 21 Nov 2011)
The AT&T/T-Mobile merger made sense because of the similar spectrums, network speeds, etc. Both companies would have profited from it, but this Sprint idea is beyond me. It's like they're both trying to shoot each other in the face and flush the evidence.
6. Shatter (Posts: 2030; Member since: 29 May 2013)
Sprint would have to spend more money converting everything to CDMA than T-Mobile is worth.
11. remixfa (Posts: 13930; Member since: 19 Dec 2008)
They wouldnt be converting to CDMA. They would run it as 2 separate networks until they could get LTE-Voice to become a reality and then merge everyone onto a GSM-LTE system.
Why GSM-LTE instead of CDMA-LTE? For one, world wide compatibility which gives them a stronger marketing position. The second reason is buying power. They would no longer have to get custom made phones for the network. They could use "world phones" like most other networks and thus might be able to purchase phones at a lower price then they currently do (which means they would be subsidizing each subscriber a little less) which would increase margins on the backside.
I wholly agree with this article. I think sprint taking over T-Mobile is a dumb idea at this time. It was a dumb idea last time too. Sprint is not a healthy company at the moment and is juggling too many things. They need to streamline and simplify long before they talk a major merger with yet another incompatible technology.
13. Droid_X_Doug (Posts: 5854; Member since: 22 Dec 2010)
The whole concept of two separate networks brings back memories of the CDMA-iDen disaster. It didn't work then and I don't see how it would work now, unless you are talking about two completely separate companies under common ownership. If it is two separate companies, why bother with a merger? There is no gain to be realized from a merged company.
D-T should insist on a huge break-up fee ($6B anyone?) and that would silence the parlor games.
16. Phonecall01 (Posts: 136; Member since: 02 Apr 2009)
Got a good point. But a CDMA/GSM company merger is very unlikely to have the same results. The iDen technology even while popular with business didn't have enough support on its own to grow. While GSM is already pretty huge not to mention worldwide. So you would have VZW/CDMA AT&T/GSM and Sprint/CDMA/GSM that could be a big advantage for Sprint, but it all depends on how they execute that collaboration. There's always chances of the whole thing going south.
17. Droid_X_Doug (Posts: 5854; Member since: 22 Dec 2010)
Based on past experience with Sprint, there seems to be a greater chance of it going south than north.
23. Daftama (Posts: 563; Member since: 03 Nov 2012)
For those who don't know CDMA is far better quality than Gsm it can hold more calls per tower and release calls tower to tower better than Gsm can... Gsm got the better upper hand because of the gsm chip you can easily swap from phone to phone which makes it easier and better I rather have CDMA LTE with Gsm option like they do now
24. ilxxxli (Posts: 8; Member since: 23 Oct 2013)
are you working for Sprint or Verizon? If so you can ask them to build a tower at your house and be happy with CDMA. We are end users and we look for the most convenient way for our sake. I lost my phone a month ago and i was frustrated, until a rep told me I can go to the nearest Tmobile store, and ask them for a simcard (yes it is free!) and put it in my spare phone (LG smart phone) and use it temporarily while my insurance fly my replacement to me the next day. With CDMA i wouldnt be able to do this. CDMA sucks
32. remixfa (Posts: 13930; Member since: 19 Dec 2008)
Thats not true. On a CDMA phone you just go to the VZW/Sprint website or customer service, pop in the serial number of the old phone, and reactivate it. It takes a minute longer, but your not stranded.
CDMA is the superior technology for call quality and building penetration. That is completely true. However, LTE is GSM based. CDMA is on its last legs. Everyone and their brother in the modern world is moving to LTE and LTE voice which means everyone is adding GSM capabilities, not CDMA.
34. andynaija (Posts: 470; Member since: 08 Sep 2012)
The same can be done for CDMA as well. I went shopping around this time last year and I lost my CDMA smartphone in a store. Couldn't find it then I remembered that my mom had a spare phone (ZTE feature phone) and we went to the nearest MetroPCS store, and asked them to move the line over to the spare one. I used it temporarily until I ordered a new phone the next month. The only difference is that you got a SIM card and I had wait for the store rep to enter and change the line info (serial numbers, etc.) via their computer system.
39. thunder18 (Posts: 116; Member since: 06 Aug 2009)
Are you working for AT&T or T-Mobile. We are end users and we look for the most convenient way for our sake. My dad dropped and broke his phone a couple weeks ago. But anyone who has been a Sprint subscriber knows that to switch phones simply requires you to log into your Sprint account online and use the online tool to enter the Hex ID of your replacement phone in order to activate it. No calling Sprint. No leaving my house wasting my time and gas to go to a Sprint store to get a replacement Sim card. With GSM I wouldn't be able to do this. GSM sucks.
9. axllebeer (Posts: 265; Member since: 05 Apr 2011)
Yeah I never really considered all the fragmentation in network technology that Sprint has acquired. It's pretty painful to look at it all laid out like that. It's like going around to multiple yard sales attempting to complete a set of kitchen pans.
14. Droid_X_Doug (Posts: 5854; Member since: 22 Dec 2010)
More like going around to multiple yeard sales to complete a full service for 12 - plates, utensils, servingware, and, and, and. Plus, the project has limited time to be completed....
35. downphoenix (Posts: 2357; Member since: 19 Jun 2010)
it would have also choked the market. Between at&t and verizon, they would have owned more than 80% of the total market. Sprint and the smaller carriers would have been eventually snuffed out, because Verizon and AT&T would do whatever they could to get out of any roaming agreements to choke out the smaller carriers by killing their covering.
The FCC evffectively helped the US market dodge a nc
2. ajac09 (Posts: 1367; Member since: 30 Sep 2009)
tmobile should turn around it around and buy sprint haha
4. frmrVZguy (Posts: 38; Member since: 10 Mar 2012)
re " It makes me scratch my head.." Imagine the news headline: "German cellco spying on US customers" or "German cellco wins DOD & Gov't cell contract". This is headwind.
re "T-Mobile... nimble ... wise" I would say 'patient'. They applied new tech where they could profit instead of tying to be a market-maker as Sprint did. It was timing. Sprint's vision was correct, timing was wrong. Small-cells are now the way to complete the 4G-to-5G vision of 100+mbps. WiFi & WiMax are a necessary 'filler' tech with the class 4 MIMO, passport, carrier aggregation, speed needed to provide true 'wireless ultra-broadband' that follows a customer.
7. Johnabis (Posts: 56; Member since: 17 Feb 2011)
in reference to you asking how sprint plans to use its spectrum.. sprint is using clearwire's spectrum (2500mhz) and nextels iden spectrum (800mhz). for its LTE triband spark network. how can you be so critical of sprint but then not even mention this?
8. johnbftl (Posts: 201; Member since: 09 Jun 2012)
Absolutely terrible article. For one, iDEN has been shut off and is been converted to 800 mHz LTE. 2, T-Mobile isn't going to purchase anyone. Deutsche Telecom has been trying to get out of the U.S. market for years. Lastly, there would be no issue with GSM conversion to CDMA because within the time frame it would take, everything will be converted to LTE. All networks have a timeframe to convert to VoLTE and dismantle GSM and CDMA networks for LTE spectrum. Even if no one buys T-Mobile in the 18 month vesting period, Metro is CDMA, which would be the same transition as if Sprint purchases T-Mobile.
10. a_merryman (Posts: 685; Member since: 14 Dec 2011)
Yeah, it was an awful article, he says 5(!) (including decommissioned networks like nextel). But why would you include a decommissioned network and count the lte carrier that replaced it. They havent even been selling iden phones for a couple years. Oh, thats right...b/c the article doesn't even want to try seeming objective. I dont see how it would be any harder for Sprint to bring T-mobile into the fold than it would be for the reverse. Its not Like phones no-a-days cant fit a bunch of different bands in them. The Nexus 5 covers all of Sprint's and T-Mobile's bands after all. Technology isn't the same as when sprint bought nextel.
21. Maxwell.R (Posts: 169; Member since: 20 Sep 2012)
Sprint's network "Vision" conversion will not be complete until some time next year, so iDEN resides as a "relic." You also have not paid attention to the T-Mo/Metro merger. Metro is not selling onto the CDMA network anymore an T-Mo is aggressively converting the customer base with T-Mobile network handsets for the purposes of converting the CDMA network to LTE/GSM/UMTS. The Clearwire conversion from WiMAX to LTE is going to take just as long, if not longer than the iDEN/Nextel network.
30. Johnabis (Posts: 56; Member since: 17 Feb 2011)
sounds like someone is just being a hater to me...
12. Slammer (Posts: 1061; Member since: 03 Jun 2010)
It amazes me that with all the negativity towards Sprint and it's decisions, that people ignore the fact that Sprint is still been able to retain being the third largest carrier. No doubt Sprint's old management team has brought some descention to the carrier, however, Dan Hesse and his team had to shove ten pounds of crap into a five pound bag. This is NOT the same Sprint has years ago.
Looking at AT&T which was desolved in the 90's to curb a monopolistic position, Verizon was a buzzard hovering for its remains. Since then, the FCC has coddled the two in a cartel of hharmonious matrimony to rebuild what was taken away. Like two children separated at birth.
Sprint had to build from the ground up to achieve a position in the industry in which it has survived through all the rhetoric and manipulation of the wireless industry. It now sits on an enormous amount of spectral assets it has acquired from "Bad Decisions." Assest that can make Sprint a very powerful network.
It is easy to dismiss Sprint as insignificant. But, it is more logical to look at what Sprint is capable of and what direction it is trying to accomplish under new management.
18. QWIKSTRIKE (Posts: 880; Member since: 09 Mar 2010)
AT&T WAS DISSOVLVED IN THE 80'S I BELIEVE. In the 90's they bought Cellular One , and merged back together all of the dissolved parts into the entity that it is today. Verizon did the same, bought back all of the baby Bells to form the monopoly it is today.
22. Maxwell.R (Posts: 169; Member since: 20 Sep 2012)
Sprint had incumbent network capacity before the PCS auctions. When Sprint bought a bunch of 1900MHz spectrum, many of the incumbent properties were sold. Sprint also bought several small incumbents. The PCS build-out was from the ground up, but that does not explain, excuse or build shareholder value when you look at the Nextel disaster, Clearwire disaster or WiMAX debacle.
29. Slammer (Posts: 1061; Member since: 03 Jun 2010)
The Nextel fiasco was indeed a setback. However, moving forward as we look at the Clearwire partnership, Sprint had no choice to proceed with WiMAX. It was under pressure to utilize the spectrum allotment or forfeit the spectrum holdings. LTE was not yet ready and Sprint made the wise choice to move on WiMAX. Dan Hesse had referenced the fact that WiMAX was indeed a provision for early adoption with the idea to move to LTE. In short, Sprint had no choice and Clear was tanking. Clearwire had over 150 mhz of spectrum with no idealistic plan, motivation or financial support to carry through with a good buildout. It just so happened that Sprint and Clearwire had to join forces in spite of how people look at it. The wireless industry has not been very kind with the exception of supporting AT&T and Verizon through merge after merge. Acquisition after acquistion. It was refreshing to see the government kill the monopolization AT&T would once again gain through a T-Mobile USA swipe. This would've left Sprint open for a Verizon merge/acquistion. We need more competiton; not less. Sprint is on the right track and as I begin to see the network vision building in my area, the towers already restructured, have been noticeably improved. Building penetration, speed and quality is great. Scars take time to heal. Sprint is doing well in its healing process.
41. Maxwell.R (Posts: 169; Member since: 20 Sep 2012)
That is not accurate. Craig McCaw (founder of McCaw Cellular) led a group of investors to buy the entity that became Clearwire as we knew it back in 2004. Intel and Motorola dumped a bunch of money into the venture. Sprint didn't enter the picture with Clearwire until 2007. That partnership amounted to a spectrum swap and roaming agreement in an effort to expand Sprint's footprint. Sprint had already decided on WiMAX by then, and since Clearwire was on the same page, it was a relative match.
Clearwire started with buckets of cash, and the IPO raised even more. Some of your points make sense on the face of it, but to say that Sprint had no choice rings hollow.
15. cripton805 (Posts: 942; Member since: 18 Mar 2012)
Why is wimax still on? Ditch it already. And why begin spark before their regular LTE!? I switched to ting and I save half of what I used to pay. Sometimes more for the same usage.
Why would I pay more for the same service.
42. thunder18 (Posts: 116; Member since: 06 Aug 2009)
Because Sprint promised to keep the network up a certain amount of time to support users still in contract with WiMax phones. As a customer, how would you feel a month after purchasing your phone if the carrier told you your data was going to be shut off in, let's say a couple of months for the sake of it?
19. mikelemon (Posts: 93; Member since: 21 Nov 2013)
T-Mobiles parent company wants out of USA and that is why they are sell it. DT the parent company wanted out when then where going to sell to AT&T but DOJ didn't let them. So no it should not be t mobile buying sprint.
25. TheMan (Posts: 407; Member since: 21 Sep 2012)
Bottom line, Sprint has been consistent in its inability to implement a successful strategy. T-Mobile hasn't been a world beater, but at least has been building on successive "wins" in recent years.
Deutsche Telekom's situation has no bearing on whether TMO should or shouldn't buy Sprint. Like many (if not most) European telecom firms, DT profitability has been under siege. Selling TMO meant ready cash and allowed it to avoid having to compete in two difficult markets with limited resources.
26. mikelemon (Posts: 93; Member since: 21 Nov 2013)
DT was losing hundreds of thousands of subs every year prior to no contract changes. DT was losing in the US market and had little interest in competing anymore. So they wanted to sell it. They couldn't sell it and they still want to because they still don't really have an interest in US anymore. So T mobile buying sprint is horrible move as DT has no motivation to do anymore than it has to move up. Softbank on the other hand is motivated to gain market share.
20. sarge77 (Posts: 202; Member since: 14 Mar 2013)
Sprint could be good not sure why they're called sprint if it's taking forever to add new towers for 4g they should be called the chill network sorry if you want 4g but we're still chilling on 3g. can't wait for spark maybe i'll see it on 4th of july by 2020.
33. johnbftl (Posts: 201; Member since: 09 Jun 2012)
Sprint is an acronym for Southern Pacific Railroad Internal Network Telecommunications. It's an antiquated name from their days as a landline company. Just like AT&T stands for American Telephone and Telegraph.
36. andynaija (Posts: 470; Member since: 08 Sep 2012)
Wow didn't know that. Learned something new today :D
28. Jeradiah3 (Posts: 1007; Member since: 11 Feb 2010)
Yet again, this is why the Tmobile - AT&T merger would have been a better deal. Why would anyone merge with Sprint anyway?
31. CEMIII (Posts: 110; Member since: 26 Jun 2013)
Well I must admit the article is spot on we shall see what happens. If T-mobile & Detuch realize how much staying power they have they could in fact step up and call the shots.
37. bwhiting (Posts: 171; Member since: 15 Jun 2013)
I would say that it would be more beneficial for the T-Mobile takeover since they have more of a stable standing right now with the towers and also with what they can do. Sprint has been working on the towers for a while now but the CDMA towers are great for the people that use the phone over here due to what can be done with them over the GSM ones so if they can go to that form of towers that would be beneficial.
The fact that it is a thought kinda makes me think what are they really thinking because it would not really work out at all for Sprint to get them right now when they are still working on the towers in the many areas that need it especially in the mid west.
38. gd761 (Posts: 109; Member since: 18 Sep 2012)
Since Sprint has More Spectrum than Both AT&T and Verizon Combined, Sprint Should Buy T-Mobile.
With the Purchase of T-Mobile, Sprint can Re-Allocate the Spectrum from WiMax and IDEN right away and then use the GSM from T-Mobile and have Hybrid phones that can take advantage of CDMA, GSM, and LTE.
When Sprint is ready, Sprint can then Shut off the CDMA Network and then Re-Allocate that as well into both GSM & LTE.
Sprint can also use the Extra Spectrum Not only for Smart Phones but also for Tablets.
Sprint can Use their HUGE Spectrum to Let Tablets Roam out into the world like Phones have been doing and Letting the Tablets have More than WiFi to be able to get online with.
Sprint and Softbank are looking to Make BIG Changes. This can be one of the Changes that Sprint can take advantage of.
What is Your Opinion on this Idea?