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Businesses Communications The Almighty Buck United States

Failure of Sprint/T-Mobile Merger Means a Missed Chance To Save $30B (kansascity.com) 127

Posted by EditorDavid from the tough-luck dept.
UPDATE (11/5/17): Sprint and T-Mobile confirmed Saturday that they've ended their merger talks, saying they were "unable to find mutually agreeable terms." The Kansas City Star reports that the failure "means shareholders of the two companies gave up $30 billion or more in cost savings that their managements had expected a merger to generate.

"One combined wireless company would have needed to invest less in its network than the two competing companies spend separately... Absent a merger, Sprint now faces a highly competitive marketplace as the smallest national player and with a more aggressive rival in T-Mobile."

Several news outlets had already reported on Monday that Japan's conglomerate SoftBank, which owns Sprint, has pulled the plug on a proposed merger between the two carriers. From a report: SoftBank will reportedly propose ending merger talks with T-Mobile parent company Deutsche Telekom as soon as Tuesday, October 31st. That's according to Nikkei, which says that SoftBank wants to end merger talks due to "a failure to agree on ownership of the combined entity." It's said that Deutsche Telekom insisted on a controlling stake of the combined T-Mobile-Sprint, and that some people at SoftBank were okay with that as long as SoftBank had some sort of influence. However, SoftBank's board recently decided that it wouldn't give up control, and today it decided that it wants to call off the merger talks.
Last Monday Sprint and T-Mobile shares both fell immediately following the media reports.
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Failure of Sprint/T-Mobile Merger Means a Missed Chance To Save $30B More

Failure of Sprint/T-Mobile Merger Means a Missed Chance To Save $30B

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  • I can't complain... (Score:1)

    by Anonymous Coward

    I've had top notch service from T-Mobile. Service beyond what is expected from a carrier.

    Sprint, on the other hand... meh. They just never have done much to make themselves stand out, and tossed technologies that were cool (iDEN, WiMAX). Heck, they were demanding $1500-$2000 from Windows Mobile app developers for a signing cert so apps could work on their devices.

    If T-mobile came on top, great. If Sprint "leadership" did... I'd probably wind up fleeing to a MVNO.

    • Did you ever use wimax? I did, and it fucking sucked. I had their service beginning in 2003 and ended it in 2013 because the quality of service kept declining. Hell, I was on the phone with Sprint support telling them that I'm always getting dropped calls, and they told me that my dropped call rate was zero percent...but then the call dropped right afterwards. I had to use the forced roaming trick to get them to drop my contract, then I switched to TMobile... Massive difference in call quality and speed, an

    • I've had top notch service from T-Mobile. Service beyond what is expected from a carrier.....If T-mobile came on top, great. If Sprint "leadership" did... I'd probably wind up fleeing to a MVNO.

      The idea was that T-Mobile would be running the show after merger. The sticking point was how much SoftBank would get paid in addition to the 40% or so of the combined company they’d still own. T-Mobile didn’t want to pay much. SoftBank should have taken what they could get while the getting was good. Sprint is circling the drain.

      • Not only is it circling the drain, they're not even trying.

        They didn't buy any spectrum last auction, so they can't really build out and compete.

        I suspect TMobile ends up buying them after they're reduced to about the size of Metro PCS.

    • Re: I can't complain... (Score:1)

      by Anonymous Coward

      No merger is the best outcome. More competition is great.

      I dropped Sprint like a bad habit after one too many frustrating support calls with script reading offshored cheap tech support though. Even competition seems unable to help them not suck.

      • No merger is the best outcome. More competition is great.

        More competitors doesn't always mean more competition.

        Verizon is bigger than Sprint and T-Mobile combined. So is AT&T. Telecom is a capital intensive business, and a combined company may have been better positioned to compete against the "big two".

        The result will now likely be Sprint slowly fading away and a weaker T-Mobile mainly focusing on cheap customers willing to sacrifice coverage for lower prices.

        Disclaimer: I am a cheap T-Mobile customer.

        • I am an even cheaper Boost Mobile (Sprint) customer. I wish I could afford to be a cheap T-Mobile customer.

        • Yes it means exactly that. What you are trying to say is that not all competitors are equally matched.

          Telecom is anything but a capital intensive business. The last vestige of significant cost to telecoms was copper lines. They have nearly eliminated them Cell service is the giant cash cows for them.

          What needs to happen is Verizon and AT&T (ne SBC) need to be broken up again.
      • More competition is stupid my friend.

        More players could be a good thing, but competition when it comes to these things is absolutely stupid.

        Carrier A - "Hey look... we put up 40 new LTE POPs in this urban area!"
        Carrier B - "Hey look... we put up 50 new LTE POPs in the same urban area!"
        Carrier C - "Hey look... we put up 110 new LTE POPs in the same urban area!!! We win!!!"

        Customer - "Hey look, I have great coverage on all 3 of my phones from Carrier A, B, and C at my office... but I had to walk 3 miles to ge
    • I think that if you were from Europe, you would feel differently about T-Mobile. I have a T-Mobile phone which I use when I'm in the U.S. and I find them to be absolutely horrifying. I've tried all of them and found them all to be absolutely terrible.

      Now... let me explain why U.S. mobile coverage is so bad... and it's easy to explain.

      T-Mobile and Sprint seem to think that they need to merge their businesses to be aloud to share the cost of building a network.

      There is such a thing as partnerships and coopera

      • Re: (Score:2)

        by satsuke ( 263225 )

        It may shock you, but roaming is a thing in the US.

        The big problem with your suggestion about (not) everyone overbulding the same area is one of capacity. Even in the EU there is finite spectrum that has been dolled out / sold off to each carrier.

        With all 4 national carriers offering unlimited usage plans, companies like Verizon and AT&T are using up 100% of their own resources, let alone enough for carriers that don't have native coverage in an area.

        • Yes, I am am TMO customer, and when I travel in Maine, I sometimes end up where they have no service, I roam to US Cellular. This is Hell.

          First, US Cellular and TMO limit me to 50MB of data in a given period, and it hardly matters if the period is measured in anything less than hours, since that's not enough data to survive merely checking for software updates and location updates in 24 hours.

          They also seem to throttle data speeds before the 50MB limit is reached, though I cannot tell quite when.

          And US Cell

  • Sprint fades into mediocrity (Score:5, Insightful)

    by jfdavis668 ( 1414919 ) on Monday October 30, 2017 @02:04PM (#55458805)
    If Spring merged with T-Mobile, it would fade into mediocrity. Now that they aren't, Sprint will fade into mediocrity.

  • Can we expect Sprint to finally get the **** off their laurels, and actually get back to improving their network infrastructure?

    No... I didn't really think so, either. <sigh>

    • Sprint has been all about increasing ARPU and decreasing churn, but not overall subscribers or network quality for many years now. At least, that's what they've had on their financial statements.

      When you read between the lines, what this means is that they're doing whatever they can to nickel and dime customers, scale back discounts, etc.

      • No this means there getting ready to start building out now that they've slightly turned the ship around.

        • They've been saying that for about 5 years now.

        • Re: Does this mean... (Score:4, Interesting)

          by ArmoredDragon ( 3450605 ) on Monday October 30, 2017 @08:10PM (#55460935)

          Actually strike what I said in that previous reply...Sprint has been saying that big upgrades are right around the corner, usually placing 3-6 month timespans, for the past 12 years. They have a tower upgrade map that always shows these short timespans, ranging anywhere from a month or a year, where they say the tower is being upgraded. Meanwhile, that entire time, the service kept getting worse and worse.

          Oh and: https://www.cnet.com/news/spri... [cnet.com]

          It's well past that two years, and two years before that, Sprint said "pardon our dust":

          http://www.cnn.com/2013/11/21/... [cnn.com]

          Seriously, this is nothing new with Sprint. I was with them for a very long time before I got tired of their shit, especially when they blatantly lied to me saying that my dropped call rate was 0%, and during that same call I got dropped, the rep actually called me back, I said WTF, and she said "I don't know what that was."

          • Theyâ(TM)re full of shit. We all have whatâ(TM)s called a call data record. It will state why a call dropped. Lost carrier, failure to roam to new tower etc. they know damn well why your calls drop. They just donâ(TM)t want to admit fault.

        • Re: (Score:1)

          by AvitarX ( 172628 )

          Oh cool, so they bought a lot of the low frequency spectrum to make that possible at the last big spectrum auction?

          • Oh cool, so they bought a lot of the low frequency spectrum to make that possible at the last big spectrum auction?

            Even when they buy new spectrum, it's really just a marketing ploy to keep customer defections down. Do they use this spectrum? Yep, but their standards for a market launch are much lower than other carriers, just like their standards for everything else. Normally carriers deploy the new equipment in a given market and have what's called a soft launch (i.e. it's not announced to the public) where they have spotty coverage, but the service can be used if somebody happens to be there with a compatible phone.

      • One heck of a way to increase ARPU by offering the BYOD "Free Unlimited for a year" promo? Chain the customers and pray they don't start churning in July?

        ....because I will be if they don't renew it.

      • The simple way to decrease churn is stop soliciting new customers,. Those who stay are satisfied, and don't churn.

        But that is not a reliable measure of success.

  • Market diversity is good for the people.

    I'm glad to see these corporations maintain their separation and continue to compete.

  • The real problem (Score:5, Funny)

    by 93 Escort Wagon ( 326346 ) on Monday October 30, 2017 @03:11PM (#55459107)

    The Japanese stakeholders were unwilling to start wearing pink shirts.

    • Odd statement, pink is nearly the national color of Japan!

      I don't think a Japanese businessman is going to find a more macho color than cherry blossoms, I mean, get real.

      Here is a picture of Softbank founder Masayoshi Son wearing a pink tie:

      http://cfile10.uf.tistory.com/... [tistory.com]

      If you could get any of these guys to wear a company print T-shirt instead of a suit and tie, I'm sure they'd be fighting over who gets to wear Power Pink.

      • THIS is the single most genuine and compelling post I've read on /. in years. Damn, you are good. Love that Japanese culture. Mostly.

  • Sounds like Denial... (Score:5, Informative)

    by SeaFox ( 739806 ) on Monday October 30, 2017 @03:16PM (#55459139)

    on Sprint's part, about who the real loser in this pairing is.

    Management/merger failures is how they got into the position they are now. Why the hell would T-Mobile, who have only been doing gangbusters-better the last five years, let Sprint take the wheel of the combined company?

  • Heck, T-Mobile could only go downhill if the merger went throw.
    • But if they can spell? Maybe it should go "throw"?
    • yea maybe take those billions and focus and getting towers outside big citys.

    • But the merger did get thrown!

      Deutch Telekom only has 3% more revenue than SoftBank, so they're close enough in size that whoever didn't get control of the combined company would be making a downhill move. But DT didn't throw it; Sprint is who threw.

  • Morons! We are surrounded by Morons! (Score:3, Interesting)

    by williamyf ( 227051 ) on Monday October 30, 2017 @03:33PM (#55459267)

    Deutsche Telekom (Parent company of T-Mobile USoA) has been trying to get rid of T-Mobile USoA for years (lustres, maybe even decades)...

    That's why these news about mergers in the Cell-Comm industry always involves T-Mobile as One of the actors.

    And while is true that the company went public when it reverse-merged with MetroPCS, the germans have not been able to get rid of it selling shares in the Opent Market.

    At this time, the Germans should realize that this repeated efforts to sell T-Mobile to another Cell-Comm concern is not the path forward, and instead knock the Door of Spectrum/charter or Comcast and merge (with one of them, although Comcas and Charter have a strange agreement regarding Cell-Com services), to be a Wireless+Cable+Wireline Concern. To sweeten the deal, they may make a pure stock merger. This will dilute ownership for them, allowing for an easier selling of shares in the open market.

    And now, a little MBA FanFic:
    1.) A meger between T-Mobile and a Big CableCo will force Sprint to merge with the other.
    2.) The merged entity resulting from Charter will, sooner or later, knock on the door of CBS/Viacom to Acquire the CW + some other table scraps.
    3.) The two merged entities will race to merge/acquire Dish.

    At that point, we will end up 4 comparable giants in the Wireless+Wireline+Cable+DTH+Content, but instead of being equal in every dimension, will be bigger in some, and smaller in others...

    Then we would see a little bit more competition from these oligopolies... Trying to leverage their strengths in one dimension to capture customers to reinforce their weaker dimensions...

    One can only hope.

    • Re: (Score:2)

      by Anonymous Coward

      more competition from that proposed outcome? you need to give your drug dealer a tip, because he's definitely supplying you with some good shit. there's no fucking way that....

      at&t+tw+directv
      comcast+tmobile
      charter+dish+sprint

      or anything resembling that

      would do anything good for us mere mortals. it would be absolutely catastrophic for competition, for consumer prices, and for content availability.

      once you get down to three major players, the odds and of collusion goes way, way up.

      five or more would be be

    • Deutsche Telekom (Parent company of T-Mobile USoA) has been trying to get rid of T-Mobile USoA for years

      If you can read the summary, it says they refused to sell it, they insisted on being in control of the combined company.

      Trying to get rid of it would mean they were happy to have Sprint control it as the party not controlling it will get more money. I mean, control has value, right? If you're getting a controlling share of voting stock, the other people are going to get extra non-voting stock to compensate. If you're wanting to get rid of it, then you come up with a cash-and-stock deal where the other compa

      • you got it t-mobile is doing just fine there current ceo relly made them get there act together and relly disrupted things t-mobile is why everyone offers unlimited data again. spint did to many lines of cocaine to think they where going to keep controlling interest wile there company burns down around them.

    • Re: (Score:1)

      by Anonymous Coward

      Deutsche Telekom (Parent company of T-Mobile USoA) has been trying to get rid of T-Mobile USoA for years (lustres, maybe even decades)...

      Not since early 2016, when TMO slowed customer churn, started pulling in comfortable profits, and moved to third place. In fact, DT sees TMO as a bright spot for growth. With the latest deal to buy Sprint, DT didn't want to give up management control.

    • Re: (Score:3, Informative)

      by Anonymous Coward

      First, T-Mobile just won a shit-ton of Spectrum in the 600MHz range, which will greatly improve both Coverage and Building penetration, so TMO service is only going to improve.

      Second, a Merger between T-Mobile and Sprint would have a difficult time getting approval based on the AT&T / T-Mobile outcome.
      Also,Mergers generally mean some Layoffs, so which an Administration focused on Job creation I see this as even more unlikely.

    • other then this time t-mobile would been the domment company unlike there last attempts to dump it off. its why the talks failed sprint wanted to keep running things despite them failing as a company.
  • actually, the owner of Sprint, SoftBank. see it here: https://www.dramafever.com/new... [dramafever.com]

  • I like my current level of service. I know it is not perfect, especially when I go to vacations to remote areas, however I get 95% of what I need at about half the price of the competition. Among the competition, AT&T seems to provide similar service with higher price, and Verizon seems to offer better service with higher price. Sprint always seemed the distant last with worse service, with worse price (compared to what I'm getting right now).

    There was some potential in T-Mobile absorbing Sprint and rep

  • Why does the word "save" so often translate into delivering less with less?

    Which lies more in the "skimp" territory, if we're being semantic.

    • Why does the word "save" so often translate into delivering less with less?

      Because they see themselves saving expenses with the same revenue coming in (at least for a while, but they'll get their bonuses before people stop renewing their long term contracts).

  • If they cannot give up control then ending the merger was the right thing to do.

  • "expected" (Score:2)

    by Tom ( 822 )

    The key word being "expected" to save.

    All mergers are accompanied with glorified accounts of how much synergy will be realized. I've been through several mergers, the last two at high management positions. In reality, only a small part of that synergy is ever realized, because the consultants never dig deep enough to figure out that no, you will not be able to merge your CMS systems because A doesn't offer this critically important feature that B offers. So you also can't save half of the IT personal, or ma

    • merger is just a nice way of saying buyout and you all will be fired in do time.

      • Re: (Score:2)

        by Tom ( 822 )

        The firings is usually the only "synergies" that are actually realised.

        Until you find out a year later that you needed half of those people, and hire them back. Well, not the same people, of course, they have other jobs now. You hire different people, then spend a lot of money training them, burning all those savings (but they were on a different quarterly report, so that's all good).

        With no exception, all the mergers I've seen close all had this firing phase, and then about a year later, a hiring phase.

  • My wife has Sprint (typical plan). I have T-Mobile ("prepaid", but it's unlimited and I pay once a month with automatic payments, so whatever).

    Her service costs between two and three times as much as mine (closer to three).

    She used to be able to say that she had a signal inside large buildings, and I sometimes didn't. I got a new phone recently that needed a smaller SIM card, and now I have great service inside such buildings too. No more advantage to Sprint.

    Both have clunky websites, though to be fair T

    • Sprint is far from the best phone company, especially in term of customer support, but their prices are amazing. I'm not sure how you ended up paying 2-3x more for your wife's plan. Our family has 5 people on unlimited accounts with Sprint and we pay $109 per month. The best I could do anywhere else was like $160-180.

    • Re: (Score:2)

      by satsuke ( 263225 )

      Sprint doesn't automatically move you to a cheaper rate plan, you have to call and change it most of the time.

      You are also possibly comparing the rate for a single line of service vs the pricing for 4+ lines of service. It's crazy, but at Sprint, $25 per line when purchase 4 vs $50 for one.

  • Failure of Sprint/T-Mobile Merger Means a Missed Chance To fire employees making a total of $30B. Because synergies [wikipedia.org]

    BTW, if you want to use a combined Sprint/T-Mobile, you could just sign up for Project Fi.

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