Sprint CEO makes it sound like the carrier will be on life support if T-Mobile deal is scuttled

Sprint CEO makes it sound like the carrier will be on life support if T-Mobile deal is scuttled
In the early days following the announcement of T-Mobile's $26.5 billion merger with Sprint, the two carriers tried to sell the public on the idea that the deal was necessary for the U.S. to maintain leadership in 5G. The deal awaits approval from regulators including the FCC, which was forced to halt its examination of the transaction when the federal government shutdown starting in December.

Those in the know say that the odds of the deal closing are basically a coin flip, and Wall Street traders have priced the shares of T-Mobile and Sprint to reflect only a 30% chance that the deal will go through. And now, according to KCUR, Sprint CEO Marcelo Claure is trying to sell regulators and the public on the idea that Sprint might have problems competing if the deal doesn't go through.

Claure says that because Sprint doesn't generate positive cash flow, if the merger is blocked by regulators, the company will have to go hat in hand to the bond market and the banks. The executive states that Sprint will have to raise the $20-25 billion it will cost to build out a 5G network. And if the deal doesn't go through and money can't be raised, Claure says that Sprint won't be able to offer wireless in rural areas and will only be able to construct a limited 5G network.

Some opponents of the T-Mobile-Sprint merger say that the deal will create a duopoly. But as Claure points out, the wireless industry in the U.S. is already a duopoly with Verizon and AT&T controlling 93% of the market. While some who oppose the deal point out that it will reduce the number of major U.S. carriers from four to three, if Sprint can't compete, the bottom line is the same thing.

New Street Research analysts say that Sprint is "barely on track to generate enough EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) to cover network investment and interest expense." Sprint has nearly $40 billion in debt and if the wireless provider isn't merged into T-Mobile, those IOUs could be a huge albatross around its neck.

FEATURED VIDEO

8 Comments

1. notfair

Posts: 673; Member since: Jan 30, 2017

Corporate scums. Whenever I hear that multi billion corporations have no profit makes me puke. But but nobody cares for the poor shareholders.

3. Greenmule

Posts: 128; Member since: Apr 24, 2017

If the quote below is true then there it is. The politicians know and they know what it means, If Sprint goes under, then all we US citizens will hear is "Too big to fail!! Too big to fail!!" Then party out of power will want to "rescue Sprint". And that will be the US government's entree into the wireless/cellular market. Sprint can't compete if it can't survive. "There ain't room in this town for the four of us!!" New Street Research analysts say that Sprint is "barely on track to generate enough EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) to cover network investment and interest expense." Sprint has nearly $40 billion in debt and if the wireless provider isn't merged into T-Mobile, those IOUs could be a huge albatross around its neck.

4. Sparkxster

Posts: 1116; Member since: Mar 31, 2017

Hoping the merger goes through. There's plenty of companies that could build out there own cellular network to become the new #4 carrier.

7. andrewc31394

Posts: 270; Member since: Jun 23, 2012

don't you think if it was easy to become a wireless carrier, other people would've done it by now? existing carriers, much like broadband providers, make things very difficult for new competition to arise. but sure, let's go ahead and let them merge and have less competition... cause that always makes things better, right?

5. Eclectech

Posts: 336; Member since: May 01, 2013

They conveniently leave out that they're owned by SoftBank, a company with over 222 Billion dollars in assets. I'm pretty sure there's a bank that will take a chance on Sprint.

6. Acdc1a

Posts: 461; Member since: Jan 21, 2016

Who proofread this article? AT&T and Verizon make up 69.7% of the wireless market when you take out minor players like CSpire and US Cellular. Add their subs in and it's less. Does that mean that we're not in a duopoly? No, but the numbers are WAY off.

8. talon95

Posts: 976; Member since: Jul 31, 2012

I'd rather have 3 major carriers than 2. And Sprint has been going bankrupt for a long time, save it now or just say goodbye to all that talk about wanting competition.

9. civicsr2cool

Posts: 245; Member since: Oct 19, 2016

I wish Sprint would just disappear all together, no merger, no bailout, just disappear. Its that garbage.

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.