Big Telecom: Terms Set For Sprint To Buy T-Mobile For $32B

First time accepted submitter Randy Davis (3683081) writes 'A report from Forbes says that Sprint buying T-mobile for $32 billion is almost done. This will clearly rock the top two telecommunication companies in the U.S., Verizon and AT&T. The news report also said that T-mobile will give up 67% share in exchange of 15% share of the merged company. Officials of both Sprint and T-Mobile are confident that FCC will approve this deal since AT&T's $48.5 billion acquisition of DirecTV got approved.' One reason for that confidence: "The predominant feeling is that combined T-Mobile and Sprint will be able to offer greater competition to Verizon and AT&T , ranked first and second respectively in the U.S. market. It will also give Sprint greater might in the upcoming 600 megahertz spectrum auction, especially since part of it excludes both Verizon and AT&T from bidding."

InforWorld puts the potential price even higher, and points out that the deal could still fall apart.

Re:Competitition is good.

[Anonymous Coward]

No, fuck you. This is exactly the opposite of introducing competition. It's an extremely shitty company with incredibly shitty service (Sprint) buying a smaller competitor with far better service (T-Mobile) in order to make a much more massive, shittier company than before possible.

This is an anti-trust violation, so fuck these guys!

Two different tech

[slashkitty]

Aren't the two using two different cell technologies? How are they to be combined? Do tmobile users need to get new phones?

Re:Less consumer choice, higher prices ahead

[meustrus]

Now I know that Sprint and T-Mobile don't have the best wireless coverage, but you're going to have to try a little harder to justify the claim they have the worst customer service. I was under the impression it was just a universally accepted fact that Verizon's customer service is the worst in the industry despite their otherwise excellent network service. As I've heard someone say, Verizon is the hottest girl at the prom, and worse, she knows it.

Re:Less consumer choice, higher prices ahead

[apcullen]

actually if sprint and t-mobile combine their networks they might be able to compete with verizon, which is a good thing for everybody. right now each company only competes in certain markets.

Re:Sprint and T-mobile should give up on LTE

[King_TJ]

I disagree. 1st. tier cellphone companies DO in fact have to be big .... The dollar amounts involved to roll out and maintain a cellular network across a whole country the size of the United States is steep enough that the little guys just can't accomplish it well.

What we do have room for are the 2nd. tier "regional carriers" -- and personally, I'm disappointed we haven't really seen more happening in that arena. If you're not big enough to compete with the likes of Verizon or AT&T in nationwide coverage, fine. How about focusing on providing top quality coverage and customer service, with good data performance, all within a few states?

For many years, I had an account with U.S. Cellular, in St. Louis, Missouri, and was very pleased with them. Their little marketing strategy of "all incoming calls are free" meant I didn't really need to buy a lot of cellular minutes on my plan. (It's relatively rare I place a call to someone vs. all the times I'm taking a call.) Signal strength and call quality were excellent too. Really, the only downside was a relative lack of choices in phones, because you had to select one designed to work on their network - and they didn't have as much pull as the top carriers to get the latest handsets first. Still, they'd typically manage to get at least 1 or 2 of the "hot" phones out there at any given time. (I had a Motorola Razr flip phone with them, when it was still the in thing.)

T-Mobile, IMO, has really gotten on a roll with upgrading its network to become something respectable. It has a lot of issues still, but as a current customer, I see evidence all the time that change is happening. (My phone has carrier updates pushed to it practically every week, as new towers come online.) Just last week, something changed where I live, too. For a couple days, all of us received "no service" or weak signals throughout the business day, but then suddenly, things came back up with a signal strength far superior to what we ever had before. (I used to use a signal booster in the house, but was able to turn it off after the upgrade.) Can't say if it was a new tower, or a modification or repair made to some existing one -- but it was a nice improvement.

Re:Less consumer choice, higher prices ahead

[evilviper]

The obvious problems here is #3/#4 merging meaning less consumer choice and higher prices and worse customer service ahead.

CHOICE: 2 bowls of candy, and 2 bowls of steaming dog crap, isn't a lot of "consumer choice". If a merger turns that into 3 bowls of candy, then consumers will have MORE choice as a result of the merger. That's a big "IF," but both outcomes are possible.

PRICES: While prices could rise a bit, AT&T and Verizon are both desperate to get a foothold in the prepaid cellular market. To do so, they have dirt-cheap service plans that are nearly competitive with Sprint and T-Mobile, without that whole lousy coverage issue. I don't see how SprinTMobile will be able to raise their prices much, without losing all their customers to pre-paid plans from the big two.

Re:Two different tech

[businessnerd]

This has become much less of a challenge than it would have been only just a few years ago. With more of the handset makers moving to the strategy of one device across all carriers and the carrier exclusive model almost dead (thankfully), most customers who have bought a mid to high end smartphone in the past two years likely already have both CDMA and GSM radios. I know at least if you have CDMA, you most likely also have GSM, not sure if the other way around holds true. In the short term, they will obviously have to maintain two networks, but over the long term, they need to pick one and begin to transition everyone over. If I were them, I would pick GSM simply because it is much closer to be a "standard" than CDMA and has a very strong global presence. This makes them more appealing to those moving from overseas and further strengthens the appeal of GSM in the US (If I choose Sprint but end up unhappy, I can take my phone to AT&T, but if I choose Verizon, my phone is stuck with Verizon). For transitioning, there is the very slow way: every new handset sold defaults to GSM until there are no more CDMAs (or few enough to pull the plug). They will also likely heavily promote cheap/free upgrades for anyone still on CDMA to speed things up. Or there is the quick way. Everyone has until X date to switch to GSM, and by the way, we have a lot of cheap/free phones to choose from, plus those new flagships that you know you gotta have right now. Slow is expensive, but will piss off less customers, the other will be cheaper, but could piss off more customers. AT&T and Verizon could also captitalize on those disgruntled customers and make it very easy and cost effective to switch (especially Verizon if Sprint chooses GSM and their CDMA customers want to bail). So in conclusion, it is a challenge, but not one without a solution, and nowadays, is a lot easier to solve.

Re:I would allow them to merge allright

[schnell]

Now, if they had to give back both spectrum and exclusive rights to some of their infrastructure so that competitors can come in, that would be a fix that might work.

This is the thing I think people don't understand about the US cellular industry - you can't try to "create" a new competitor because it will fail. The reason is that cellular business is all about scale - precisely the thing that is driving the T-Mo/Sprint acquistion. Fundamentally, you need to have the same 30-40K+ cell towers to cover most of the population centers in the US whether you have one million users, 10 million, or 100 million. When you are distributing that same infrastructure costs across fewer users, your economics are far worse than the big guys and it's very very difficult to compete. Additionally, size brings additional benefits such as more clout when negotiating device costs from Apple or Samsung, better deals with network infrastructure providers, etc. Scale is everything.

So the problem with bringing in a new competitor is that it will take them many years to even get to a point equivalent to today's T-Mobile, which is struggling to make ends meet with a national network supporting 25 million users. Even if you subsidized out of taxpayer pockets the spectrum and some of the infrastructure, you'd just be propping up a company for the sake of competition that would have to merge/get bought by someone else eventually or remain uncompetitive on pricing and probably go out of business.

It's unfortunate for a variety of reasons... but when you have businesses with a high financial barrier to entry and a model that grows efficiency with scale, economically speaking you will always see a trend towards consolidation to the minimum number of viable players.

noooooo!

[whistlingtony]

I'm a T-Mobile customer, specifically because I have a GSM phone (Sprint ditched/is ditching GSM last I heard) and because T-Mobile doesn't have any stupid contracts. I pay, they give me service, we're both happy. I LIKE T-Mobile. Sure, I don't always have great coverage. it's a minor distraction at worst. It works fine.

I have my own phone (I buy used Nexus S phones, and reflash them with the latest stock Android. No stupid carrier BS on my phone!). I LIKE paying $150 for a phone, and still getting the latest wiz bangs. I LIKE not having a contract. Yes, I even like feeling a little superior to the Morons that buy new phones every 2 years and shell out $ for something that's not really essentially any better than what I have.

Damn. I hope Sprint doesn't buy T-Mobile. If they do, I hope they don't F it up...

Re:Anybody remeber Nextel?

[rabtech]

This is wildly inaccurate.

Full disclosure: I'm a Sprint shareholder (at $2.70, back when people were predicting bankruptcy). I've been following them for some time.

Seems like they've been planning this for some time, and are absolutely dependent on the merger going through, because Sprint has been a complete laggard with LTE deployments, despite their massive modernization effort, and doesn't seem to be trying AT ALL.

Actually Sprint has engaged in a nationwide replacement of all their radios and base stations, including installing fiber to almost all of their towers and using gigabit microwave to connect the towers that can't get fiber to ones that can.

Sprint's major problem with 3G was the outdated backhaul. They were still using T1 lines everywhere, as they first got distracted with Nextel, then sunk money into WiMax hoping it would take off as the next-gen standard **.

I have LTE now in the DFW area and it's fast and works well.

Sprint wasn't allowed to touch Nextel's spectrum, in the 3G days, so they only freed up their big block of 800MHz when LTE was first being deployed. With a little foresight, they could have put 800MHz LTE radios on their towers, and immediately boasted the best LTE coverage. With great LTE coverage, they could save money by neglecting their 3G network, and pretty quickly stop selling phones that are able to fall-back to anything other than 800MHz LTE. After all, LTE can do simultaneous voice and data, even if AT&T and Verizon have been slow to use it, perhaps for the above reasons.

The Nextel 800mhz spectrum is a very small slice; it only has enough space for one 5x5 LTE channel and 1 CDMA voice channel, no more. If they had started making the switch, they would have cut off their existing Nextel customers overnight. Not to mention the fact that LTE wasn't even a standard at the time and no vendors offered LTE tower equipment and no handsets supported it. If they had tried to squeeze a CDMA data channel into that space it would have been painfully slow (far less than the 3MB theoretical max).

FYI: They have been turning on 800mhz and I get noticably improved performance inside elevators and building interiors. The goal is 2.5Ghz for crowded urban areas (where you don't want towers to cover much distance), 1900Mhz for general use, and 800Mhz for indoor areas and rural coverage.

But Sprint was half-hearted about their great opportunity... first saying they'd use some of that 800MHz band to improve 3G coverage, then later retracting that incredibly stupid idea. And while they've promoted their "Network Vision" upgrades for a couple years, they've still only very slowly expanded their LTE coverage to more than the very biggest urban areas, even skipping some major ones.

Actually they completely rebuilt their network, including all backhaul/routing, all radios, all tower equipment. That project is almost complete now. Compare LTE coverage in 2012 to today and you can see a massive difference. You can't do that overnight.

With Nextel, the actual problem was they waited for Qualcomm to add PTT tech (push to talk) to CDMA so they'd have a replacement for the IDEN handsets. Right as that became available, everyone stopped caring and wanting smartphones with data plans. In hindsight, they should have forced Nextel users to switch immediately and stopped running dual networks for no good reason (doubling tower and backhaul costs). They'd have lost the same number of customers in the end but saved a bunch of money.

And they didn't ever leverage the WiMax network they spent so much money deploying. Sure, it's not LTE, but by just releasing a dual WiMax/LTE phone, Sprint could have boasted the biggest "4G" network from day #1, and they could have begun LTE deployments everywhere they didn't have WiMax, giving wider coverage, quicker. Instead, there's no WiMax/LTE phones to be found, and their LTE deployment simply overlap