Sprint and T-Mobile need to merge, or one will die says analysis

Sprint and T-Mobile need to merge, or one will die says analysis
New Street Research has prepared a report for its clients that comes to the conclusion that T-Mobile and Sprint must merge, or else one of the carriers won't survive. Yet, the same report cautions that an attempt to merge the two mobile operators right now, would probably get blocked by U.S. regulators. In fact, earlier this year, following rumors that a deal between the two carriers was being discussed, Sprint Chairman Masayoshi Son and CEO Dan Hesse visited the FTC and FCC to get the lay of the land. Both times the executives were told that a Sprint-T-Mobile deal would be challenged by the agencies.

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.

source: FierceWireless



1. thedarkside

Posts: 654; Member since: Apr 30, 2012

$50 bucks on sprint croaking first.

41. InspectorGadget80 unregistered

600$ says analyst should croak first and die in a miserably death

52. tuminatr

Posts: 1124; Member since: Feb 23, 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: 832; Member since: Mar 08, 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: 1124; Member since: Feb 23, 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: 7; Member since: Sep 24, 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.

3. ajac09

Posts: 1482; Member since: Sep 30, 2009

RIP sprint

4. Augustine

Posts: 1043; Member since: Sep 28, 2013

Or, Sprint dies and its assets, including spectrum, are liquidated among the remaining competitive three carriers.

16. SuperAndroidEvo

Posts: 4888; Member since: Apr 15, 2011

You mean Verizon & AT&T because T-Mobile will never get spectrum from the government.

19. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 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: 1260; Member since: Jan 24, 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: 3723; Member since: Aug 16, 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 unregistered

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: 5993; Member since: Dec 22, 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: 537; Member since: Feb 17, 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: 1043; Member since: Sep 28, 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: 1515; Member since: Jun 03, 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). John B.

28. grahaman27

Posts: 364; Member since: Apr 05, 2013

Let sprint just whither and die, and all CDMA coverage from Verizon as well.

57. tuminatr

Posts: 1124; Member since: Feb 23, 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

6. Emmanuelz

Posts: 222; Member since: Aug 01, 2013

The only one who's gonna die is sprint

7. Slammer

Posts: 1515; Member since: Jun 03, 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? John B.

12. SellPhones82

Posts: 569; Member since: Dec 11, 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: 537; Member since: Feb 17, 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: 1515; Member since: Jun 03, 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. John B

47. Salazzi

Posts: 537; Member since: Feb 17, 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: 1515; Member since: Jun 03, 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. John B.

64. UMAFan

Posts: 14; Member since: May 14, 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: 1515; Member since: Jun 03, 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. John B.

75. lsutigers

Posts: 832; Member since: Mar 08, 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: 537; Member since: Feb 17, 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.

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