Report: Sprint and T-Mobile are exploring the possibility of a merger

Report: Sprint and T-Mobile are exploring the possibility of a merger
The last time there were serious rumors about a possible Sprint merger with T-Mobile, it was 2014 and the landscape in the U.S. mobile industry was different than it is now. Three-years ago, Sprint was the third largest stateside carrier and T-Mobile was fourth. Every scenario involving a Sprint merger with T-Mobile had the former taking control of a combined company. But things have changed since then. Led by CEO John Legere, T-Mobile has become the most customer friendly, innovative U.S. wireless operator. It accounted for more than 200% of the industry's growth in postpaid phone accounts in the first quarter, and two-years ago leapfrogged Sprint to become the number three carrier in the U.S.

T-Mobile's success hasn't stopped talk of a merger between it and Sprint. Both firms seek to become big enough to challenge Verizon and AT&T at the top of the industry food chain. The 2014 talks ended when U.S. regulators said that they would not approve a Sprint hookup with T-Mobile. Now, with a Republican administration in office, there is a chance that the FCC and FTC would look favorably at a deal. And back in February, Sprint parent SoftBank said that it would cede control to T-Mobile in order to help a deal get done.

Both companies agreed to table merger talks until the FCC auction of 600MHz spectrum came to an end. That happened last month when it was announced that T-Mobile had won 45% of the airwaves up for bidding. And now, Bloomberg is reporting that the two have started "exploring" merger talks. SoftBank Chairman Masayoshi Son and Deutsche Telekom Chief Executive Officer Tim Hoettges both told investors separately this week that they would be willing to discuss a merger. SoftBank owns 78% of Sprint, while 64% of T-Mobile is in Deutsche Telekom's hands.

Currently, T-Mobile's market capitalization (shares outstanding multiplied by the stock price) is $54.5 billion compared with Sprint's valuation at $31.94 billion. Neither side has hired financial advisors yet, so the current talks can be characterized as preliminary. In addition, both Sprint and T-Mobile could be targeted by other firms. For example, earlier this week we told you that Comcast and Charter had agreed to look at some joint ventures in the wireless industry including the possibility of acquiring T-Mobile or Sprint.

source: Bloomberg

FEATURED VIDEO

25 Comments

1. Rampage_Taco

Posts: 1060; Member since: Jan 17, 2017

Sounds like a huge headache waiting to happen. Combing Sprints outdated CDMA network and T-Mo's GSM

3. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

CDMA is not outdated. CDMA is better than GSM for lots of reasons. CDMA holds a better signal. Works in buildings better than GSM. The signal also travels farther, which means you need less towers. It also is faster do to less users. Consider Tmo and ATT both use GSM plus smaller carriers too. That over 200M people using it vs CDMA where VZW and Sprint don't share a band where its far less users. T-Mob and ATT share at least one band on GSM. That makes for a huge crowd. You're saying CDMA is outdated? Its updated every year just like GSM. How is it outdated, when GSM is older?

6. DeejayReact

Posts: 40; Member since: Jun 14, 2013

good point.

7. Rampage_Taco

Posts: 1060; Member since: Jan 17, 2017

CDMA was designed and used during WWII where as GSM was developed in the 80s. LTE is built on the GSM standard and it will continue to be advanced. With CDMA, and it's specific bands it allows the carrier to block it's phone from being used properly on other networks whether it be another CDMA network or GSM. Of course some phones have an exemption from that rule. Also GSM is internationally used where CDMA is heavily used in U.S. and Russia, and I believe South Korea has a CDMA network as well. But my point was just considering the networks are different structures, it's a lot more work to make the network compatible. like the AT&T/Cingular merger and T-Mo/Metro Merger.

21. tuminatr

Posts: 1125; Member since: Feb 23, 2009

First the argument is a moot point because both companies use LTE technology and with some simple tweaks it would be comparable provided the phone support the frequencies both companies use. The concept of cdma is from WW2 that is true but the cellular technology that uses CDMA was developed in the early 90's TDMA that GSM uses is even older As for LTE being a gsm technology that is not completely true. GSM is old 2g tech, LTE was the adopted 4g standard the the association of GSM carriers decided to use.

11. Crispin_Gatieza

Posts: 3137; Member since: Jan 23, 2014

Techie, no one is claiming that GSM is better than CDMA and I agree that CDMA offers superior transmission. However, outdated or not, CDMA is going the way of the Dodo and iDen by 2020. Verizon announced plans to sunset CDMA about a year or two ago so it's a moot point.

18. Ocr22

Posts: 29; Member since: May 12, 2017

Not sprints Cdma i had it sucks inside buildings. T-Mobile gsm works better sprints cdma in buildings . Now if we talk verizon Cdma that's a whole different story it actually works real good everywhere inside buildings were sprint has nothing at all. Don't know why but yea in my experience i had all and verizon just works unlike sprint.

19. QWIKSTRIKE

Posts: 1459; Member since: Mar 09, 2010

That was when they were using 1900mhz CDMA frequency, now they are switching to the 800mhz frequency which does go through buildings.. They are constantly upgrading the network. So the new Sprint is coming back, but they lack the funds to finish because Hesse paid 15 billion to sell the iPhone.... He should have used that to build out the network. He inked the most expensive iPhone deal of all of the carriers.

20. Ocr22

Posts: 29; Member since: May 12, 2017

Well kinda too late for me . i just stuck with tmobile for now since it works everywhere even deep in buildings . Here in LOS ANGELES i have gotten service in elevators, underground parking lots in downtown ,high rise buildings on T-Mobile were with sprint i had nothing 2 months ago. I had sprint 2 months ago a s7 edge and well like i said it didn't work that good .

22. tuminatr

Posts: 1125; Member since: Feb 23, 2009

thats got nothing to do with the tech because both companies are using LTE, it does mean that T-mobile has spent more money on their network in your area. In building coverage is all about build out

23. L0n3n1nja

Posts: 1566; Member since: Jul 12, 2016

Verizon plans to drop CDMA in the future, they've already been converting their devices to use LTE for voice. Global standard is GSM as well, CDMA may not be outdated, but it's losing in the same way HD DVD lost to Blueray.

24. tuminatr

Posts: 1125; Member since: Feb 23, 2009

You are partly right CDMA is a 3g technology. LTE is a 4g tech and its replacing it. GSM is a 2g tech 3G for GSM players was HSPA or W-CDMA (it also used CDMA for its transport mechanism) and it is being replaced by LTE. AT& T and T-Mobile both have plans to shutter their GSM networks soon.

25. tuminatr

Posts: 1125; Member since: Feb 23, 2009

that why this argument it pointless within the next few years All the network providers in the USA will be using LTE and LTE networks are for the most part comparable.

4. Eclectech

Posts: 350; Member since: May 01, 2013

I imagine they'd combine the company sort of in the same way T-Mobile absorbed MetroPCS. Initially MetroPCS customers continued to use their own network, but new Metro customers were sold phones using T-Mobile's network. Time passed then all MetroPCS customers had to use a phone on T-Mobile's network. Once everyone was off, then T-Mobile refarmed the bands, allowing them to beef up their LTE offerings.

16. QWIKSTRIKE

Posts: 1459; Member since: Mar 09, 2010

They would merge like Google Fi does using Tmobile and Sprints air waves on one phone. I find that Fi using both systems are adequate, but I find that Sprint has a larger coverage foot print, which is validated by root metrics last Quarter. If they merge they could expand by killing off redundant towers and use the arsenal of 600/2500mhz spectrum to slay opposition.

2. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Actually Softbank the owner of Spriont was talking about he would like a merger. I honestly don't see it happening, but if it did, it would combine them to be the US 3rd largest telecom. I am not sure that will be good for consumers. Sprint is expensive and is right up with ATT and VZW. T-Mobile is actually cheaper than all of them and a merger could see a spike in prices. But if T-Mobile parent company, remain the parent, then it would be a good move. But am curious as to how you switch a CDMA network to GSM.

17. Crispin_Gatieza

Posts: 3137; Member since: Jan 23, 2014

You flip a switch like T-Mobile did when they acquired MetroPCS. They gave their customers a year to buy compatible handsets and that was that.

26. tuminatr

Posts: 1125; Member since: Feb 23, 2009

see my comments from above

5. monoke

Posts: 1162; Member since: Mar 14, 2015

Sprint had better not touch my pre-paid plan. I hate mergers. Somebody always feel they gotta change something!

9. j_grouchy

Posts: 177; Member since: Nov 08, 2016

Heh...remember when Sprint bought Nextel and how long they hung onto the virtually useless iDEN?

13. Crispin_Gatieza

Posts: 3137; Member since: Jan 23, 2014

iDen was far from useless and every construction contract mandated all field management personnel to carry a Nextel. It was so ubiquitous that the stipulation was boiler-plated into contract documents. Had Sprint convinced Motorola to make a better Nextel Android than that garbage iClutch perhaps Nextel would have survived. PTT was always available even when there was little voice signal. I repeat, far from useless.

15. mrmessma

Posts: 271; Member since: Mar 28, 2012

Tech site logic of anecdotal evidence against a technology: "I didn't use it, therefore nobody else did, and it was garbage."

10. torr310

Posts: 1659; Member since: Oct 27, 2011

They probably need to merge because both Verizon and ATT are so big.

12. Joosty

Posts: 473; Member since: Mar 14, 2013

You know how easy it is for me to use different phones? A simple sim swap

14. MartyK

Posts: 1043; Member since: Apr 11, 2012

I like the fact, you can surf and talk at the same time (without LTE availability). And switch phones out without calling the carries. Which make it easier to buy another phone and give your older phone away to family and or friends. :)

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.