Sprint and T-Mobile need to merge, or one will die says analysis
The FCC and FTC would love to see another carrier challenge the Verizon-AT&T duopoly. On one hand, a combined Sprint-T-Mobile might present more of a challenge to the pair at the top. On the other hand, there is a thought among the regulators that they should allow T-Mobile to stay independent. The upstart carrier has been leading the industry in pro-consumer innovations, and some staffers at the FTC and FCC would love to see how far T-Mobile can go.
According to New Street Research, both Sprint and T-Mobile do not have enough revenue to cover their fixed costs. The analysis says that the two will need to bring in $10 billion over the next year and a half to be competitive. The report adds that both companies need to buy additional spectrum in order to keep up with demand.
The bottom line is that New Street suggests that both companies be allowed to merge now, which would lead to lower costs for the companies, and lower prices for consumers. If a merger happens because one or both carriers are faltering, the merged company will not be in a good position to challenge the duopoly at the top.
41. InspectorGadget80 (Posts: 6135; Member since: 26 Mar 2011)
600$ says analyst should croak first and die in a miserably death
52. tuminatr (Posts: 656; Member since: 23 Feb 2009)
Not possible because they are now backed by Softbank, T-Mobile has much less money. Probibly what will happen is they will both do their best to compeate and get beat big time by Verizon and ATT
67. lsutigers (Posts: 697; Member since: 08 Mar 2009)
No way dude, not with Softbank and Spark. I think Sprint will gain significant momentum later this year and next with the new network and Sprint Spark LTE Advanced 100+ mbps speeds.
I don't think TMO will either, they would just be a much stronger competitor to the duopoly if they merged though.
71. tuminatr (Posts: 656; Member since: 23 Feb 2009)
True, it gives them alot more revanue from the customer base togeather they are roughley the same size as verizon or att. I have sprint and am happy with it. I do think thats gonna be a tough sell to the FCC
2. actuallyknowathingortwo (Posts: 2; Member since: 24 Sep 2013)
$100 bucks on sprint croaking first. t-mobile seems like the only company on the up rise. not to mention the data is fast as hell everywhere I have ever gone.
4. Augustine (Posts: 611; Member since: 28 Sep 2013)
Or, Sprint dies and its assets, including spectrum, are liquidated among the remaining competitive three carriers.
16. SuperAndroidEvo (Posts: 3755; Member since: 15 Apr 2011)
You mean Verizon & AT&T because T-Mobile will never get spectrum from the government.
19. Droid_X_Doug (Posts: 5530; Member since: 22 Dec 2010)
No, the spectrum will be auctioned off. Govt. may put some low-cost access spectrum on the table, to compel the carriers to provide lower cost broadband access.
5. kanagadeepan (Posts: 634; Member since: 24 Jan 2012)
Wait till Sprint becomes smaller than T-Mobile. Then allow T-Mobile to purchase Sprint. Sprint buying T-Mobile (though Sprint is now bigger one) is not a good idea, imho.
8. Commentator (Posts: 2294; Member since: 16 Aug 2011)
The problem is Deutsche Telekom wants to sell T-Mobile, not buy Sprint. The best bet is probably for SoftBank to purchase T-Mobile as well and just merge the two.
11. engineer-1701d (Posts: 415; Member since: 13 Mar 2014)
The best bet is Google or Comcast but then and start service cross my fingers it's Google I could see it being the best and fastest out there
21. Droid_X_Doug (Posts: 5530; Member since: 22 Dec 2010)
Regardless of whether DT wants to sell T-Mo, the Feds ain't letting Sprint buy T-Mo. If DT really wants out of T-Mo, they need to find another buyer. Maybe DT does an offering to the public? I think their share market value is higher than what they purchased it at, so no loss for them. If they really want out, that could be a viable option.
29. Salazzi (Posts: 131; Member since: 17 Feb 2014)
It does not want to sell T-Mobile. It USED to want to, but about 1-2 months ago they announced they're no longer rushing to sell it and are willing to see where it's trajectory is headed. Seeing as T-Mobile is on the rise, I would put all bets on the fact that now DT doesn't want to sell the carrier. Look for an announcement by the end of Q2 announcing they're no longer looking to sell it whatsoever.
38. Augustine (Posts: 611; Member since: 28 Sep 2013)
It's good to know, because I couldn't see the business-case to get rid of T-Mobile US when it accounts for 20% of DT's operating income and 30% of the assets. AFAIK, DT is a profitable company and doesn't need to sell its valuable assets do survive, does it?
62. Slammer (Posts: 936; Member since: 03 Jun 2010)
Well, no bet is guaranteed. However money talks, and it was always on again/off again with Tmobile's sale plans. I don't trust John Legere. He wreaks like a used car salesman(or a phone sales rep).
28. grahaman27 (Posts: 345; Member since: 05 Apr 2013)
Let sprint just whither and die, and all CDMA coverage from Verizon as well.
57. tuminatr (Posts: 656; Member since: 23 Feb 2009)
go do some research on Softbank this would be a good deal for consumers because combined they would have enough spectrum and infrastructure to dominate. Softbank the company that owns sprint is the price leader in Japan and Chairman Son has said that his intent is to be faster than everyone else and be cheaper to do that he needs both companies customer base
7. Slammer (Posts: 936; Member since: 03 Jun 2010)
Status quo in this industry is what survives. While tmobile is garnering media attention through tech sites, the reality is that tmo is not really shaking the industry enough to hurt the other carriers. The only thing tmo is doing is drawing the worst customers of the other three. In contrast, the other three have actually been adding subs in regards to Tmobile's sound bites. Sprint is now Softbank with a ton of cash backing. It's coverage tramples Tmobile's and Tmobile is still for sale. Anyone take a guess at which one will be swallowed up?
12. SellPhones82 (Posts: 474; Member since: 11 Dec 2008)
Exactly John, T-Mo is the consumer darling right now but DT has wanted to unload them for awhile and seems hesitant to invest the money needed to get their network where it needs to be. T-Mo needs Sprint much more than Sprint needs T-Mo. Softbank has the funds to do what ever they want so long as FCC and FTC approved. I also think the two combined would be capable of stealing away some of the "good" customers form AT&T and VZW and also start a true price war that would benefit customers on all US carriers.
31. Salazzi (Posts: 131; Member since: 17 Feb 2014)
You're high. Is that why T-Mobile is switching all their 2G into LTE? Is that why T-Mo will begin implementing 700mhz by end of Q2? Clearly they've got the cajones to do what needs to be done, contrary to what most people think and believe. And with all the new customers, investors are gonna be pouncing on this darling, and combine that with new customer funds, the network is going to challenge the top 2, and make Sprint irrelevant.
45. Slammer (Posts: 936; Member since: 03 Jun 2010)
As much as I crave a good blunt now and then, my getting high days ended in the early 70's. However, it appears yours haven't quite ended yet. Advancing on a network is mandatory but doesn't equate to being a force to reckon with. It is to stay relevent in a fast paced industry of technology. Tmobile is a 4th largest carrier that narrowly escaped consumption by one of the larger. It is only because of the failed merge that tmo has excess spectrum to play with. It needs far more than this to present a respectable coverage area to equal the amounts The other three have.
Look, no doubt tmobile is trying hard to make a name for itself. But it is important that you not get caught up in media hype contained to these sites. It clouds the real world judgement.
47. Salazzi (Posts: 131; Member since: 17 Feb 2014)
Real world judgement is this. T-Mobile aggressively adding customers will catch the eye of investors, as it always most assuredly does. I remember the early 2000's, around 2000 and 2001, when Verizon was running programs galore in order to bring in customers. Their coverage? It was absolute s***. They were literally throwing money offers at new customers, while running attractive plans to bring them over from what was then the divided AT&T (AT&T broke up due to monopoly reasons). The reason I speak with such certainty is because the moves I see T-Mobile pulling are familiar to what Verizon was pulling back in the day. It's because I know it worked for Verizon which ended up being an enormous conglomerate, that I know that if T-Mobile keeps this up, and they will, that it will pay off enormously as it has for Verizon. Once Q1 results are posted, I'm beyond sure my theory will become solidified as more than just theory, and after Q2 is released, which will confirm Q1 results are here to stay, it will become ingrained as fact.
51. Slammer (Posts: 936; Member since: 03 Jun 2010)
Those times were different. Most carriers were more localized than national. Most had very spotty native service. Then it started. I once left AT&T three times only to become its customer again because of it purchasing my carriers. Same with VZW. The saving grace was roaming. That wasn't good enough. The wealth that VZW and AT&T got, was very dependant on what they inherited from the proposed breakup.
Agreed that the two atttacted investors, but the futuristic outlook was more difinitive. With the two being already more powerful even after the dissolve, it was a no brainer. Since then, it has always been the two growing stronger. Look at Alltel. Best customer service in the industry. Inventors had high hopes. The deals came, the hype was created, then gone in a blink of an eye. There isn't much left on the front for TMO to get its hands on to build the momentum I'm sure there will be investors to buy and sell, but in all honesty, l feel the hype is going to be short lived. Tmobile needs consumers willing to spend; not just Investors. Too much power in the hands of the big two.
64. UMAFan (Posts: 12; Member since: 14 May 2012)
Oh my god your ignorance is baffling. They only have spectrum because of the failed merger???? Tmobile buying metropcs just gave them 20+20mhz LTE in many markets Verizon and at&t can not possibly attain. Right now Tmobile is the best quality LTE you can buy. Both from a technical standpoint as well as a real world results stand point.
Tmobile is a national carrier that covers 96% of the US population with voice. Virtually all the big cities have LTE now. They've committed to getting that full 96%,to LTE.
69. Slammer (Posts: 936; Member since: 03 Jun 2010)
Tmobile also purchased spectrum from VZW giving it evenm more. So what's your point? If you want to validate your argument, it would be wise to understand mine. It takes more than just spectrum. It takes cash. And it takes a lot of it. Where is Tmobile going to get all this cash? It is is already slashing the prices down to almost no positive revenue. It needs help. More help than just adding a couple million budget, bargain hunter customers. VZW and AT&T are closing the duopoly gap very quickly. How much time before they call checkmate? Both Sprint and Tmobile are in trouble in spite of propped up tabloids. This increasingly puts the consumer in worse trouble. All the spectrum in the world is useless if it can't be put to use very quickly.
If a company buys tmobile, it better be a company that knows about the wireless industry. A company that has a ton of backing money to immediately invest. And more importantly, it better have corresponding, already built out infrastructure.
75. lsutigers (Posts: 697; Member since: 08 Mar 2009)
The only reason T-Mobile has seen recent (but likely temporary) success is because they are giving away the farm with incentives, pricing and promotions which are not sustainable for the smallest carrier in the US. They are attracting the least profitable customers. It's only a matter of time before something gives and it will likely be the sale of TMO to Softbank / Sprint, as DT wants out. If Japan is any indication of what Softbank plans to do in the US, by becoming a larger player they will continue aggressive pricing and be better capitalized and positioned to take market share away from AT&T and Verizon.
72. Salazzi (Posts: 131; Member since: 17 Feb 2014)
20+20mhz? or 20+20ghz? Just asking out of curiousity. They got 700mhz from Verizon which would boost building penetration and distance.. less mhz=further coverage and more penetration. more mhz= shorter range, but higher bandwidth. 20mhz would be phenomenal for coverage while 20Ghz would be kicka** at speeds.
15. omaianu (unregistered)
There is no basis for your claims whatsoever. How do you figure that TMO is drawing the "worst" customers? I would argue they are drawing the best and smartest customers. Those who are savvy consumers. TMO is definitely hurting Verizon and Att. People are leaving in droves. Keep in mind that the industry shake up is very young and is gaining momentum. It will clearly take 3-5 years, but if TMO continues to come up with consumer friendly policies and keeps working on their network, the numbers will be very different. Or VW and ATT will follow suit with new consumer friendly policies to compete. Either way, everyone wins.
22. Droid_X_Doug (Posts: 5530; Member since: 22 Dec 2010)
+1. The only reason for the recent promotional moves by AT&T and VZW is due to the pressure from T-Mo. Take T-Mo out of the picture, and everything goes back to duopoly and the consumer gets screwed.
25. SellPhones82 (Posts: 474; Member since: 11 Dec 2008)
T-Mo is getting the AT&T and VZW customers that can't afford to stay with them. You and I know that T-Mo coverage pails in comparison to the big two so most customers are willing to stay and pay more to get more. Many people I work with switched to T-Mo, only to cancel within two weeks due to coverage, or lack there of. The $20-$30 saving a month isn't worth it if your phone doesn't work. T-Mo customer friendly policy are great for customers but kill their bottom line. In the end they still need actually make money at some point, otherwise how do they pay for network updated and more spectrum? T-Mo doesn't have 3-5 years to wait and see and if AT&T and VZW follow suit then why would customers leave them for less coverage at the same price? Everyone loves an under-dog, which is what T-Mo is at this point. I also think their "uncarrier" moves were put in place to make them a more attractive purchase. Like the guys that buy under preforming bars and run all kinds of drink specials to get more business, then sell it to someone else a year or two later for a profit.
65. UMAFan (Posts: 12; Member since: 14 May 2012)
That's why the bothered buying metropcs and buying spectrum from Verizon right? Spending billions.
26. Zsep123 (Posts: 6; Member since: 30 Mar 2014)
Worst customers as in, the ones who either cannot afford the other carriers or do not care about the quality of service they're getting. For a customer who's not just scraping by to make end's meet, $20 savings is not worth your phone not working when you need it.
Like it or not, T-mo's coverage is awful, and if you're financing a phone with them, the price difference isn't much. PLUS, employee discounts are gone now, so with taxes, the bill is about the same as if you were on a better carrier with a discount.
I definitely agree with the analyst here, and would love to see a merge, on the condition that new leadership is introduced. Heese is an idiot and Legere is just a jerk.
27. jroc74 (Posts: 4720; Member since: 30 Dec 2010)
Whats the definition of a smart customer? One that values price or service?
You cant really have both overall. Unless you go pre paid and get on a AT&T or Verizon pre paid carrier....maybe.....
Over the years T Mo and Sprint have always came up 3rd or 4th....depending on where I lived. AT&T and Verizon are surprisingly neck in neck for overall service.
A few areas near me Sprint shined...but those areas were so few it wasnt worth it....same for T Mo. Verizon has dead spots...so they arent perfect. But a dead zone for Verizon meant sporadic service....where that same dead spot for Sprint and T Mo meant no service...and thats outside...
32. Slammer (Posts: 936; Member since: 03 Jun 2010)
I can assure you that my view is correct. History has proven that the smaller carriers often make attractive deals that lure the groups of people looking to save money. Verizon and AT&T have consistently benefited by these moves because they have the money to match the price plan initiatives while the smaller struggle to make the revenue off of the customers that were the least profitable at the big two. The marketing of the a little more money but far better coverage will always attract the better customers. Once the smaller carriers have exhausted all initiatives and consumed allocated funds for these initiatives, the bottom line concedes to be economy class carriers. Those looking for good deals are the ones that spend the least. Sooner or later, carriers cease to exist by merge or purchase because the cash flow is no longer a sustainable number.
The break down here is that Tmobile is doing exactly what every other carrier in history has done as last ditch efforts to try and resuscitate itself. The larger carriers have always followed suit as a basis to retain customers while the smaller slowly whither away. Then it is back to normal. There is the old saying, you don't have to be the best, you just need to out live the competition. In this industry, AT&T and VZW have unlimited resources to out live the weaker. Duetche Telekom has showed very little interest in keeping Tmobile together. But, rather giving them life support until sale. Tmobile's moves resemble an over glorified prepaid carrier at this point. And that is exactly what type of clientele it is attracting. You can't claim for one moment that most of Tmobile's customers are of higher income status. If you can, show me the proof.
AT&T and VZW are pampered by the government and regardless of how people feel about Sprint, it has remained a strong 3rd carrier and has far more financial assets throughout the telecom industry to keep them relevent over tmobile.
46. snowgator (Posts: 3188; Member since: 19 Jan 2011)
I don't like agreeing with you. There are far more advantages to T-Mobile becoming a force, and the price battles that has started as a result of their offerings becoming an all out war.
But, the bottom line of the carrier is proving difficult to argue with. T-Mobile has added customers, but their profit levels have not increased. I think they are doing what they have to do to survive. Problem is, as poster after poster has mentioned, Sprint now is a new company with an equally aggresive CEO at the top and a ton more cash flow. T-Mo is left to go it alone. There is not an improving bottom line, and sooner or later they will get sold. Period.
Right now, they look fine. 12-18 months from now, these cut-rate plans and short term commitments will catch up to them if they do not get some investments.
48. Slammer (Posts: 936; Member since: 03 Jun 2010)
Why don't you like agreeing with me? I'm a nice person. Really. I am. Lol.
I think everyone would love to see TMO and Sprint stand on their own. But, with VZW and AT&T controling 80% of the US industry, the price wars will always be temporary unless we can offset the difference to 50-60%. Even then, the carriers need an equal balance of profiled customers. VZW and AT&T, have the coverage and consistency to retain the customers willing support the financial revenue. With this revenue, they have successfully amassed the prime spectrum leaving the leftovers for the others.
You know the story.
55. engineer-1701d (Posts: 415; Member since: 13 Mar 2014)
sprint they have to many networks no plan in site 2 yeaars down the road making everyone buy new phone for new service, i really think google will buy tmo and build out its fiber net to make it faster and use the fiber calling option to keep prices down, people really dont talk on phones that much its data soc, vids and internet now.
61. Slammer (Posts: 936; Member since: 03 Jun 2010)
The thought of Google purchasing T-Mobile is an interesting one and possibly not out of the question. But, in defense of Sprint, it does have a plan and it is well on its way. While the multi-spectrum holdings may seem overwhelming, it is managing the deficit quite nicely. Once the 800mhz spectrum is activated, Sprint will have a very competitive network.
9. Miracles (Posts: 459; Member since: 31 Aug 2013)
I wonder how much Son paid these guys for this report....T - Mobile ain't going nowhere. Sprint got good backing but don't know how to rack up customers.
18. Droid_X_Doug (Posts: 5530; Member since: 22 Dec 2010)
"...which would lead to lower costs for the companies, and lower prices for consumers."
Mergers have never lead to lower prices for consumers. That is how I know that Son paid the shills for the report - they are just parroting his talking points.
10. thedarkside (Posts: 652; Member since: 30 Apr 2012)
Sprint has no backing. i work at verizon and ive switched more people from sprint than any of the other carriers. sprint actually just got 4g in my area, so maybe theyll have less people switch but i have plenty of friends that are going to give sprint the axe. i also have friends that have tmobile and they dont want to switch.
13. JayBEE (Posts: 16; Member since: 03 Apr 2014)
Sprint, your fifteen minutes are up! Be gone! Verizon, you're next!
17. Droid_X_Doug (Posts: 5530; Member since: 22 Dec 2010)
VZW ain't going anywhere, except to add to their customers. Nothing like wishful thinking.
14. whichwirelessforme.com (Posts: 5; Member since: 10 Apr 2014)
Sprint is doomed unless they merge. T-Mobile has been making some great moves that have the 2 "Big Guys" nervous and reacting accordingly.
20. SellPhones82 (Posts: 474; Member since: 11 Dec 2008)
They have been making big moves to attract new subs, but also lost $20 million in Q4 due to said moves and ARPU continues to fall. Plus they are in big need of spectrum and will be in trouble if they can't talk the government into changing the rules for next years spectrum action. Otherwise AT&T and VZW will buy up all the 600 MHz so that T-Mo gets little to none and then they have little to worry about. Sprint on the other hand has the spectrum from ClearWire (2.5 GHz), as well as the old Nextel 800 MHz gives them the potential to compete with the Comcast's of the world and offer true nation-wide wireless broadband.
56. engineer-1701d (Posts: 415; Member since: 13 Mar 2014)
they dont have the 800 mhz they where forced off that years ago after 911 because emergency lines are 800 they got pushed up thats why nextel fell of the world the 1900 band was not good for the hybrid phones 2 way sucked, the the nextel side fell of the face of the earth i wish sprint had that net still service every time and where even on 911 when the phone networks shut down from to much use.
70. TheRequiem (Posts: 138; Member since: 23 Mar 2012)
Your out of the loop, they have 800mhz nationwide.
30. grahaman27 (Posts: 345; Member since: 05 Apr 2013)
I know I'm not the only one that is happy about the thought of sprint dying.
53. Slammer (Posts: 936; Member since: 03 Jun 2010)
Only those seeking revenge, wish that competition go away. But, who loses in the end when this happens? I wish that both TMO and Sprint can stand alone by themselves. However, my greatest wish is to offset the powerful duopoly of big red and big blue. Unless both become powerhouses to be actual competition, Sprint and TMO will never tame the beasts.
24. Alphageek (banned) (Posts: 27; Member since: 22 Jun 2011)
I'm not so sure I trust what ANY analyst has to say.
33. Eclectech (Posts: 54; Member since: 01 May 2013)
All of you saying Sprint is going to die underestimate Sprint. Sprint has been around for many many years and they have a great track record for surviving. If anything, I doubt T-Mobile can sustain their model of under cutting everyone else. They need money and giving it away doesn't help them.
36. Augustine (Posts: 611; Member since: 28 Sep 2013)
You knw AT&T, don't you? Alexander G. Bell, the inventor of the telephone, founded it. Well, SBC bought a tittering AT&T and decided to retire its old name in favor of one widely recognized. Yet, the AT&T everyone knows is not the original AT&T, but SBC re-branded. That one, after having been around for decades, is effectively no more.
34. shamatuu (Posts: 105; Member since: 02 Nov 2011)
I hope T-mobile takes over Sprint. T-mobile has better coverage than Sprint.
35. cncrim (Posts: 459; Member since: 15 Aug 2011)
Google, buy Tmobile and become your own carrier.
44. Professor (Posts: 127; Member since: 02 Aug 2013)
I like that idea... Google should buy T-Mobile. Sprint screws everything they get their hands on. Google will make T-Mobile grow up. Sprint is just going to destroy T-Mobile to get their spectrum and screw all T-Mobile (Simple-mobile and MetroPCS) customers.