Sprint's Board said MetroPCS merger "didn't feel right"
Sprint has been looking around for a deal and at one point had considered making a run for T-Mobile before AT&T did. The nation's third largest carrier is trying to get closer to the top two, Verizon and AT&T. Analyst Christopher King of Stifel Nicolaus & Co. said that Sprint is still seeking a merger partner and that MetroPCS rival Leap Wireless could be the next target. King believes that MetroPCS could be on T-Mobile's short list for an acquisition. A spokesman for Sprint, John Taylor declined to comment as did both Drew Crowell and Greg Lund who are spokesmen for MetroPCS and Leap Wireless respectively.
Sprint's board rejected the deal to buy MetroPCS, allegedly saying that the acquisition of the contract carrier "didn't feel right." But there might be more to the story. Analyst King says that the board's rejection of a deal that Hesse signed off is indicative of friction between the CEO and the board. If Hesse does not have the board's support, his job could be in trouble. "It certainly indicates a different line of thinking between Dan Hesse and his board," King said. "Having this public a breakup on a deal that he’s endorsed is almost akin to no confidence."
Even with the addition of the Apple iPhone to its lineup, Sprint continued to lose customers and even sold fewer iPhones in the latest quarter than analysts expected. MetroPCS, on the other hand, beat analysts expectations and added 69,000 new subscribers in the last quarter. The current economy is perfect for MetroPCS as its customers don't get locked into a contract. And by peddling mid-range Android models and offering LTE 4G service, MetroPCS gives smartphone fanatics the features they want without getting locked in for two years.
Sprint has a dilemma on its hands. The carrier needs to be able to provide national LTE coverage to keep its old customers, never mind adding new ones. But the spectrum that the carrier was getting in its deal with LightSquared will not get government approval and Clearwire is having financial problems of its own as indicated by the news that Google is selling its stake in the company.
Sprint is going to have to do something in order to compete and based on information from those who were involved in the deal, the carrier was just one hour away from announcing the solution in the form of the MetroPCS purchase before the board refused to get on board. Time is running out and with T-Mobile announcing that it will be soon offering its own LTE pipeline, the pressure on both Hesse and Sprint's board gets tighter every day. While a purchase of MetroPCS was not a perfect solution, it would have gone a long way toward giving Hesse and Sprint some breathing room to figure out a way to add customers instead of losing them.
1. snowgator (Posts: 3452; Member since: 19 Jan 2011)
Okay, Sprint needs some good news. Fast. I really thought most of their loss of customers was due to the iDEN shutdown. But, it still looks bad. They want a LTE system, but can't find a dependable partner. Now this? I cannot believe the believe the board would pass on this just because of a falling out with Mr. Hess. There has to be more to the story.
6. BuckeyeCadet86 (Posts: 77; Member since: 26 Oct 2011)
Isn't it interesting that your comment implies they cannot move forward without a partner...
I feel that Dan Hesse doesn't seem to have a long term viable view with Sprint. He has long relied on other companies for Sprint's future growth, first with Clearwire and Wi-Max, now his attempts with LightSquared and MetroPCS. While the MetroPCS deal sounds good, it would take nearly 2 years to completely mesh the LTE network and current spectrum with Sprint's existing network and by then it won't matter because Verizon and AT&T will be completed with their LTE network rollout (or at least well on their way with AT&T).
Perhaps Sprint's board would rather take the ownership of their own network and work toward a viable 4G LTE solution of their own making, yes it costs a lot of money to build out a network but these short-term solutions will only be stop-gaps and as Sprint's latest quarter shows, it isn't really working great as it is.
13. remixfa (Posts: 14255; Member since: 19 Dec 2008)
sprint needs consolidation... badly. they are still operating too many networks. Dan Hesse has done a lot to stop the hemmoraging of Sprint, but some of his deals.. like the iphone deal.. have made them whipping boys to other companies. All of the big plans so far have been dependant on another company to bail them out.. apple, light squared, metro, tmobile, clear wire, and even selling off their towers. And in all this time they have done squat to completely kill the IDEN network and other things that are financially tying them down.
consolidate the network, take the short term hit from angry iden rednecks.. give them a free phone to get on CDMA.. raise your prices a smidge if you need to and get building on that LTE.
2. Mr.Mr.Upgrade (Posts: 454; Member since: 30 Aug 2011)
sprint is done your stock is worth just two dollars....... verizon will buy u out soon... mark my words
3. joey18 (Posts: 587; Member since: 20 Jul 2010)
The only way sprint cant compite is lowers those plans let att and verizon those spenced contracts 69 plan no extra 10 thast why people dont go for sprint
4. sun0066 (Posts: 107; Member since: 12 Feb 2011)
at least in the Miami area ( south florida ) sprint signal is ok and gets the job done, without pay what ATT wants and at the same time be limited, so Sprint wish you the best of lucks .
15. TechnoTechyes (Posts: 63; Member since: 24 Jan 2011)
I travel the country Key West to Seattle, Honolulu to Bangor, ME, and the only areas I've been that really lack Sprint coverage are: Middle of Wyoming west of Casper. mountainous regions but they outperform Verizon and AT&T there (in that: nobody can make a call, but at least Sprint allows texting) Ironically, Verizon's map claims coverage there, but nobody seems to be able to get it. Sprint's maps say no coverage, but they have some.
There are little pockets, where Sprint fails, but every carrier has those. Even if their maps say they don't... I do have to state Verizon has the best coverage, but their maps overstate where they have coverage, and that has put us in danger a few times. We have camped in areas Verizon marks red (Colorado Mts.) Verizon's signal there is dead flat zip. There are Mtn Lions, Rattle Snakes, steep cliffs, ice and frequent lightning storms there. If you don't have a signal, be honest and save lives.
5. Gawain (Posts: 405; Member since: 15 Apr 2010)
Let's see, been bleeding cash since buying Nextel for some obsene amount of cash, saddling it with debt ever since, been losing customers since 2007, started making positive sub-adds with the iPhone, but started losing cash faster, sunk a ton more money into Clearwire which has an operating margin of negative-135% and has never made money, Google is selling their share of that investment...
..."didn't feel right"...I got it! It's code for "we don't have the money and we can't float more bonds".
7. ngo2dd (Posts: 896; Member since: 08 Jul 2011)
How are they listing customer another article on the same site say that gain customer in Q4
8. squallz506 (banned) (Posts: 1075; Member since: 19 Oct 2011)
Sprint really should buyout LEAP wireless.
9. QWIKSTRIKE (Posts: 967; Member since: 09 Mar 2010)
They spent millions for the iPhone, and they need to sell as many as possible, but as I mentioned in another thread anyone one that was left at Sprint wasn't there necessarily waiting for an iPhone. They are late to the party when other phones like Droid Maxx, GN, GSII, are eating the iPhones lunch. People left Sprint for the GN on Verizon, and the GN as well. If Tmobile gets iPhone some of their users will buy it, but not in landslide amounts. Windows phone would have been a better addition than the iPhone for the billions that they paid to get it. Now Sprint will have to be slow adding other smart phones because not having LTE, and their need to sell iPhones to satisfy the money they fronted Apple. Not to mention analyst say they may have to float more stock to pay Apple off in my opinion for a declining phone.
10. Jyakotu (Posts: 832; Member since: 12 Dec 2008)
Honestly, Sprint should have purchased MetroPCS, not for customers, but for their LTE network and just build out from there. If they purchase Leap Wireless, since Cricket uses Sprint for nationwide coverage anyway, then that's additional spectrum as well. I know Sprint is for the "little guys" when it comes to the carriers, but they need all the help they can get. I'm a Sprint customer, former AT&T customer, and the only thing Sprint has going for them right now is that they're a value carrier, like T-Mobile. Sprint had better watch itself, because even though Verizon said that it doesn't need Sprint, they will be looking for their spectrum if Sprint can't stay afloat. That or some foreign CDMA carrier (if there are any) will come and try to take over.
11. BuckeyeCadet86 (Posts: 77; Member since: 26 Oct 2011)
Sprint is really only a value carrier if you use tons of data, otherwise T-Mobile is $30 cheaper and Verizon and AT&T are only $5-$10 more a month. Sprint is only a value if you are the 5-10% that use a ton of minutes and data, otherwise they have fairly limited options and can be quite expensive. Sprint has the highest ARPU of the 4 major carriers... yeah ARPU I went there.
14. DigitalJedi_X2 (banned) (Posts: 346; Member since: 30 Jan 2012)
You're joking right? For the same amount of minutes, At&t and Verizon on their 450 minute plan with comparable data plan(5GB) will run you $130 a month BEFORE taxes are factored in. Same plan on Sprint is cheaper by about $30 or $40 dollars and there is NO data cap! Yeah... I'd stick with Sprint any day of the week. On top of that, their customer service is superb. At&t and Verizon SUCK at customer service. Alot of Sprint haters/arm chair analysts here and it's cracking me up! Sprint isn't going anywhere nor will it be bought out. Trust me on that one. And I've had both Verizon And At&t, and their data is horrible to nine existent in Queens, the Bronx, Brooklyn or parts of New Jersey. Sprint on the other hand, I have excellent data and reception everywhere I go. So me and my SGSII will be just happy where we are. With Sprint.
16. archangel9 (Posts: 233; Member since: 07 Feb 2010)
I agree 100%. Ok they're having their issues w/Lightsquare and now Metro(which would've been a excellent ideal ,many of my associates have Metro and they would've had the iPhone 4/4S).It would ve meant a capital for the agressive LTE rollout and more powerful reception. In Miami,particularly SoBe ,reception is no problem except in certain parts of a building. I HOPE THEY CAN COME BACK TO THE TABLE Mr.Hesse and the Board.Put petty stuff aside and go in for the best interest of your subscribers..VZW is waaaayy too expensive as with ATT!!! I ride with Sprint .