My Take On A Sprint/T-Mobile Merger/Acquisition/Buyout/Sale/Purchase/Transaction/

While I like to jokingly consider myself T-Mobile’s number one fan, it’s hard to argue that its position in the wireless marketplace is looking good. After a disappointing fourth quarter in 2010, we’re back today with yet another round of rumors and tech talk regarding a potential deal with Sprint. Only this time, things are a little different since, as Bloomberg reported earlier, Sprint would actually be the buyer this time.

I’ve watched many of your comments both in response to me on Twitter, Facebook and the blog itself show extreme negativity with morsels of “ehh, it won’t be so bad” responses to the potential sale. However, we have to look long term here and not short term. Any deal wouldn’t likely take effect for months (years) and wouldn’t adversely affect your current service.

Humor me for a moment and think long term. Sprint has been putting the idea around lately that they are considering a move away from WIMAX and over to LTE. T-Mobile has said that, at least on some scale in the next two years, LTE is the direction they are heading. It is possible, however you may feel about it, that any merger could result in two concurrent networks running simultaneously while both companies work toward an LTE rollout that would allow them to join as one. Sprint isn’t foolish. After their troubles with Nextel migrations to Sprint, they won’t make snap decisions on joining two networks that are already being shown the future. Sprint could do fantastic things with T-Mobile HSPA+ spectrum providing a faster network for its customers than its current 3G network provides. Simultaneous voice and data for their customer base? They’d love it. It’s far too early to predict if Sprint would try and fold the T-Mobile customer base into the Sprint CDMA network. Far, far, far too early.

Let’s call a spade a spade though. T-Mobile and Sprint, merger or not, both need to discover new ways to attract customers from the behemoths of Verizon and AT&T. A combination of the two companies would provide greater reach with manufacturers, up to and possibly including Apple which would be remiss not to make arrangements to provide both the iPhone and iPad to any combined company.

More subscribers and T-Mobile’s HSPA+ network give Sprint a much larger footprint if and when they decide to move to LTE and give them a stronger backup 3G network than their current CMDA offerings. That’s the second time I’ve made that point in this article and it’s one that can’t be ignored.

While most of you might be in shock mode over any sort of a potential deal, that’s not to say it’s all bad.
T-Mobile may keep its name or both companies may come up with a new name. It’s likely that T-Mobile which continuously wins awards for its customer service could help Sprint out in that area giving both companies a win. Let’s be clear and say that I am not recommending this deal in place nor am I giving my blessing. Not to say I am delusional enough to think that it will have any effect on a possible deal, but I do understand why the tech world is running around discussing the possible benefits of any arrangements. If you think long term, LTE style long term, an argument can be made that both companies could benefit from a potential deal.

I want T-Mobile to remain my beloved T-Mobile. Unfortunately, my beloved T-Mobile is my beleaguered T-Mobile and, given that the Deutsche Telekom CTO said in plain wording that all possibilities are possible, we have to prepare ourselves for bad news. T-Mobile needs to do something and I’m not sure what the answer is. Lower prices aren’t working. Newer and more powerful phones aren’t working and Carly, as lovely as she is, isn’t winning over new customers en masse.

My fingers are crossed this doesn’t happen and, if anything were to happen, this website would morph along with the new company. We’ll always be here covering the T-Mobile news and we’ll follow it wherever it may go – to Sprint, Clearwire or infinity and beyond.

David

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  • MIKEEEEE

    if it’s as amicable as the t-mo/orange mashup in the UK, BRING IT ON!

  • cybah

    Any merger of Sprint and Tmo will be the last straw, I will be dumping Tmo after 8 years. (after leaving Sprint for them)

    Customer service is what keeps me at Tmo, and Sprint’s is horrible (and continues to be horrible years after I left). Customer Service will suffer.

  • Anonymous

    iPhone.

  • Ch123

    T-Mobile’s customer service is outstanding. I have been with them for 12 years. My sister has Sprint, and their customer service is a nightmare! I would have to find a new carrier if the merger goes thru and Sprint takes over customer-nonservice.

  • smart

    Sprint is only in the us regional company and tmobile is a global company. Why would tmobile even bother to merge. Dt considers tmo usa a growing asset so it would obviously not sell…yes the q4 2010 results lacked growth in customer base, but tmobile still made a profit because of data arpu increasing by 25% over last year. That means that tmobile is in a great position to only get better. Sprint who?

  • Just me

    Sprint Sucks… I live in Dallas, and I have great services… to me.. Verizon sucks and so does ATT…. I’ll keep tmobile… if they sell… i may just have to make the unwanting desiring move to Metro… :-/

    Question: If T-Mobile is going to sell to Sprint, why are they the hot topics to get all the new powerful phones… Plus why are they doing so much marketing to attract new customers now….

    IDK… Maybe Sprint is up for sale… because from what I hear… Sprint is -20,000,000,000 in the hole… I put the 0′s in just to make that much of an emphasis of their deficit…

    TMO-stay your tail where you are, build more towers and keep getting better phones and you will succeed… SPRINT you SUCK, I will never go back to you ever again!!!

  • RANDOM

    I don’t understand why T-Mobile USA can’t get the iPhone. i’ve read that T-Mobile in Germany (i believe) has the iPhone. Aren’t they the same thing?!

    • http://spritemoney.myopenid.com/ Andrew

      It is business in different countries. Also T-Mobile USA uses AWS (1700/2100) as opposed to the world standard that AT&T also uses.

      • durandal_1707

        AT&T doesn’t use a world standard — the 850 band that they use is not used much outside of North America.

      • Guest

        your point is invalid. reprogramming the baseband soc is a lot easier than you think. the iphone 4 soc, a mdm6600 supports both cdma and gsm/hspda+ AND in virtually every frequency band. it just needs a sim tray which in quantity may run 5-10 cents. its a business decision, not technical.

    • Rob

      T-Mobile in Europe has the iPhone and many other phones we would love here like the HTC desire hd which is basically a super evo minus the kick stand. I wonder if one was to buy the european verison on ebay if it would work here in the states.

    • Petey

      That’s what I’m wondering too. Wasn’t phillipp humm the CEO for tmobile Germany and made T-Mobile successful in Germany? Since he have the connection… iono why its so difficult for him to try bring it to the US. He knows for a fact that T-Mobile is getting or being hurt due to the iPhone not available for T-Mobile US.

  • http://www.facebook.com/people/Jason-Harvey/1791956544 Jason Harvey

    Im not goin to Cdma if anything at&t here i come no voice and data at same time hell no

  • Trapper

    I have to say, that if Sprint’s in control, I’m gone. Their customer service (or lack thereof) was the main reason that I left. I love T-Mobile, but they’d need to be autonomous or in charge for me to stay. Sure, I’d like an iphone on T-Mobile, but for now, my hacked one works just fine.

  • Amac81

    Trapper, You and I are in the same boat. I came to Sprint through the Nextel merger. I paid for two early termination fees to escape the horror that was SprintNextel. If T-Mobile merges or is sold to Sprint, I will be among the first leaving for Verizon. I’d rather pay more for my service than deal with the customer service Sprint has to offer.

  • http://www.facebook.com/people/Kevin-Zhou-Belnap/1118237755 Kevin Zhou Belnap

    tmobile is a bigger company than sprint!!! they can’t do that

  • Benzworld

    I so don’t want this to happen. I totally see the pros and cons but Sprint is horrible. I had them a while back and there customer service sucks. I remember I spoke to a rep who said my bill was due. I told her I would pay it as soon as I got off of work and I didn’t realize my phone didn’t ring for the rest of the day. I made it home and my friends were like man your phone is off. I was like damn Sprint couldn’t wait until I made it home. It was things like that that made me leave Sprint back in 2001 and move on to T Mobile.
    If this is going to be a merger I can see it and also understand it but if Sprint is buying T Mobile out then I’m very concerned.
    I’m in advertising and I think T Mobile needs to find that one high-end power house phone and back it all the way. I know the Samsung Vibrant was a huge seller for T Mobile as was the Galaxy S serious as a whole. If you look at Verizon they know how to work that whole Droid movement between Motorola and HTC. Look at the HTC ThunderBolt commercial! Believe it or not people get excited over futuristic/spaceships/robots/explosion/post-apocalyptic feel or just a huge build up to something big coming. Look at the Motorola Xoom commercial! Carly is a beautiful girl but talking about your 4G network is not exciting and not having a powerful phone to back it up is lame. If T Mobile gets the Samsung Galaxy S2 this would be the ideal phone to showcase, back and promote.

    Check out the link below that Samsung did as a teaser for the Samsung Galaxy S2 right before MWC 2011. This is just a teaser and there is more build up and excitement in this 30 second clip in any of T Mobile’s commercials.

    http://www.samsungunpacked.com/html_ver2/explore_1.html

    T Mobile is lacking excitement at this point in time!

    • Petey

      The carly girl can be attracting, but she isn’t wining alot of people heart… sadly to say… I totally agree with you regarding Verizon commercials/ads… they are very interested! unlike T-Mobile where it’s all talk… it’s boring and people are not easily persuade with t-mobile commercials unlike verizon commercials

  • Anonymous

    After working for the company and seeing how bad the coverage is and how desperate they are, I would only hope to watch the company wither away… Not to mention the company treats their employees like robots. If it is to survive it needs new VPs and senior leaders that work, a union for their employed folks and a network outside major city limits… Or in them for that matter.

    • Canderson1977

      Agreed… They expect the world from there reps but will cut them down in a heart beat… T-mo leadership is as bad as their coverage. I can’t wait to bail post contract. Their network is comprised of mostly 2g with a downtown area covered in 3g. The phones are second rate and the customer service is ok but mostly filled with inaccurate information and a forced sales tactic which is a class action waiting to happen.

  • http://pulse.yahoo.com/_S3WFPC3XY6PZCVOTA3OKQLNGQE WSj

    What a mistake to sell to Sprint, I left them years ago for at that time the only GSM carrier Voicestream. I am already upset that T-Mobile cannot get an I-Phone in the USA, When DT can have it all over Europe. That would be the last straw, I need GSM and it would be AT&T for me my 10 phones.

  • Guest

    A big problem for T-Mobile’s lack of sales are the phones. They do not offer the greatest selection. I agree the commercials are lacking. And peaople fall for the Iphone gig and customers are taking advantage of. Tmobile has great customer service with no price gauging of Iphone like services. Also, prices and services are great. I will sadly miss T-mobile. I will leave if merged with Sprint. I have bee a customer for 10 years.

  • http://twitter.com/bryantjack bryantjack

    my heart hurts every time i see this article…

  • Freddy1

    Tmo don’t need Iphone, Tmo needs more high end androids and MORE COVERAGE to use all that power of the droids.

  • Anonymous

    When I was vacationing in California some out of the way towns were still on EDGE/2G. If Sprint buys TMo hopefully their signal will offer more coverage. Sprint will have to make big changes to adapt GSM on their present setup and vice versa.

  • Senor Chang

    Tmobile doesnt have ANY ‘high-end’ phones. Kid yourselves all you want, but there is no iPhone, EVO or Droid equivalent.

    Samsung rolls out the Galaxy line and Tmo picks up the LEAST desirable variations. At&t shows the Captivate before Tmo can even start selling the Galaxy, practically one upping them and cutting them off.

    The Nexus phones you can’t even get directly from Tmo; Dell Venue Pro the same thing.

    The only decent WP7 they offer directly is practically a re-badged HD2.

    That only leaves the G2 as their ‘premiere’ phone.

    Now… I’m not talking down to all the G2 and myTouch users, you all know what your phones can really do and how versatile they are, that’s not the point. The point is perception, and neither of those brands are perceived to be on the iPhone/EVO/Droid-level by general consumers.

    Phones and coverage. This is why At&t and VZW constantly battle for the top. They have BOTH. While Tmo coverage is excellent for me, I understand some areas are crappy.

    So yes, Tmo certainly does need the iPhone. And an EVO. And a Droid.

    • Anonymous

      “Samsung rolls out the Galaxy line and Tmo picks up the LEAST desirable variations. At&t shows the Captivate before Tmo can even start selling the Galaxy, practically one upping them and cutting them off.”

      What are you talking about? The Vibrant was out way before the Captivate.

      T-Mobile’s problem is not phone selection; there are plenty to choose from. Their problem is coverage, pure and simple.

      Having said that…I’ve experienced Sprint customer service and it’s just awful. If this happens, I’m off to AT&T.

      • Anonymous

        It’s about marketing…not coverage, I have friends who are all giddy about the iphone. We can discuss whether or not other phones are better, but it IS about image and the PERCEPTION that the iphone is THE phone to have. So, until some other company is able to market a better iphone, ipad, ipod then it will always come down to the Apple device. Yes android is the number 1 O/S out there, but it’s because they are flooding the market with android phones. Tmobile has always lacked ingenuity and the courage to be the first out there with a new device. ATT took a risk with the iPhone, the Motorola Razr way back when, and look where that got them. Tmobile, yes the first android phone, but who heard about the G1 when it came out? What marketing occurred? Almost none…Tmobile will continue to shoot itself in the foot. This “merger”/”buyout” may be the best thing.

    • http://twitter.com/Surrealistwave Surrealistwave

      t mobile dropped the vibrant before at&t showed their capitvate, get your facts straight and stop jacking off to blonde chicks on your macbook while your mom is screaming for you to come downstairs cause your beef burrito is out of the microwave, and stop hacking this site you blood soaked douche bag

    • http://twitter.com/Surrealistwave Surrealistwave

      only thing i agree with you on is that tmo does need a powerhouse phone, no scratch that, they need at least 5 high end androids, the next gen iphone, 3 wp7 devices, and 2 hp/palm devices, then they will be on point.

    • ghostnik

      no they don’t, what tmobile needs to do is stick with there customers, like you said its perception, and all iphone and verizon and at&t is, is a bunch of hype, and eventually mass consumers get bored and when they get bored with iphone thats when they will say I want something different and thats when you will see people hoping on board to android powered phones which tmobile have the most of. Also you have to consider that this a hectic economy where people are losing jobs and won’t have the ability to pay for an iphone plan on at&t or verizon, so they will come to tmobile, which out of the big 4 have the best pricing available for new and current customers. If tmobile can just strength its coverage to 1/4th that of verzion, where people on there network are getting signal under some subways in nyc and basement of malls then tmobile will be good as the word will spread that tmobile network has gotten stronger and will bring more people to tmobile and keep current customers happy. I think a lot of people should look at the economy and see that tmobile is going to be a good company for people who are trying to save in this crazy economy where unemployment is growing.

    • ghostnik

      no they don’t, what tmobile needs to do is stick with there customers, like you said its perception, and all iphone and verizon and at&t is, is a bunch of hype, and eventually mass consumers get bored and when they get bored with iphone thats when they will say I want something different and thats when you will see people hoping on board to android powered phones which tmobile have the most of. Also you have to consider that this a hectic economy where people are losing jobs and won’t have the ability to pay for an iphone plan on at&t or verizon, so they will come to tmobile, which out of the big 4 have the best pricing available for new and current customers. If tmobile can just strength its coverage to 1/4th that of verzion, where people on there network are getting signal under some subways in nyc and basement of malls then tmobile will be good as the word will spread that tmobile network has gotten stronger and will bring more people to tmobile and keep current customers happy. I think a lot of people should look at the economy and see that tmobile is going to be a good company for people who are trying to save in this crazy economy where unemployment is growing.

  • Senor Chang

    Tmobile doesnt have ANY ‘high-end’ phones. Kid yourselves all you want, but there is no iPhone, EVO or Droid equivalent.

    Samsung rolls out the Galaxy line and Tmo picks up the LEAST desirable variations. At&t shows the Captivate before Tmo can even start selling the Galaxy, practically one upping them and cutting them off.

    The Nexus phones you can’t even get directly from Tmo; Dell Venue Pro the same thing.

    The only decent WP7 they offer directly is practically a re-badged HD2.

    That only leaves the G2 as their ‘premiere’ phone.

    Now… I’m not talking down to all the G2 and myTouch users, you all know what your phones can really do and how versatile they are, that’s not the point. The point is perception, and neither of those brands are perceived to be on the iPhone/EVO/Droid-level by general consumers.

    Phones and coverage. This is why At&t and VZW constantly battle for the top. They have BOTH. While Tmo coverage is excellent for me, I understand some areas are crappy.

    So yes, Tmo certainly does need the iPhone. And an EVO. And a Droid.

  • WideAwake

    I truly think you guys are blowing the whole phone thing way out of proportion. What are you guys looking for…for the phone to microwave your food, drive your car while you sleep, walk the dog and watch your kids…oh and use it as a light saber to fight against the droid robots that go rogue….So what it takes about a whole bigillasecond longer to load a page, and so what it doesnt stroke you with an animation as the clock changes…whooooaaa!! These are phones. And although called smart phones, they only make you more dependednt on functions you dont really need. Its all an insatiable lust. Todays technology seems so much more advanced and its the newest latest and greatest and yesterdays technology is deemed as obsolete. Talk about taking a bite outta the apple or (marketing hype). THEYRE PHONES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    • Anonymous

      Stop yelling at the kids to get off your lawn, grandpa. Cell phones haven’t just been “phones” for years now.

    • yyevo

      Yes. Yes, I do want my G2 to double as a lightsaber. If they could make that happen, it would drive TMo up to the number one spot.

      It’s 2011, where’s my flying car and my lightsaber?

    • http://twitter.com/jrfischbach jrfischbach

      A built in light saber to fight against the droids would so out way the need for a FFC and a 4.3in super display amd a lot cooler too!!

    • Hawkeye7593

      Where can I get the light saber phone? I am sick of all these rogue droids!

    • http://www.facebook.com/zedklind Kevin Michael Lind

      you could potential hack your phone to drive ur car in your sleep, probably hack it to walk the dog and watch your kids.. no microwave or light saber… YET!

  • Ted C.

    From what I’ve read any “buyout” would most likely be that TMobile would be sold to a new company that combines Sprint and TMobile and that DT would retain a significant ownership stake much like Verizon Wireless’s structure (Verizon and Vodafone jointly own it). TMobile has 2 problems they are looking to fix, a short-term one and a long-term one. The short term one is the inadequate coverage problem. Verizon constantly beats on the strength of their coverage. TMobile has the worst coverage of the big 4. Fixing this is expensive but the TMobile CEO has said that this year and next year they will be making major changes to correct this. Forget high-end phones, and how good the ads are. This is the single biggest customer retention issue. But the longer term issue is spectrum. TMobile doesn’t have enough spectrum to grow beyond the next couple of years. Spectrum is limited and while some new spectrum will be auctioned soon it makes sense to consider acquiring it from organizations with underused spectrum if that’s possible. The two key organization that have underused spectrum are Clearwire (which is slightly more than 50% owned by Sprint but is in deep financial trouble) and LightSpeed (which is looking for a deep pocket player to partner with). TMobile is just looking for the most cost-effective way to deal with these problems. DT has said that they aren’t interested in exiting the US market so any outcome will almost certainly retain a large DT presence. DT has said that they would like to integrate TMobile into their global brand instead of running them separately as has been done for years now. But they have to deal with these infrastructure issues first. At that point, the fact that DT as a whole is as large or larger than all the other competitors could start to make an impact and they would have the leverage to get phones in the US that they already get in Europe. All that sounds good to me as a customer since brands are just a marketing device. What I care about is will my current provider get me what I want. The answer now from TMobile is decidedly mixed. I’m hoping that whatever happens will move this answer to a much stronger: Yes!

  • Darin Allison

    Don,t do it! I tried sprint a few years back and they did not honor a rebate I was supposed to get and the cost of the plan was a lot higher than they told me it was going to be in the store. They destroyed Nextel so I am now with verizon because Sprint cares nothing about their customers and make terrible decisions. I would think their past ridiculous behavior would be enough not to do it. Sell to Verizon if anyone.

  • steelers0131

    When all is said and done, it’s not the phones or the network…..it’s the perception of T-Mobile being an “inferior”or cheap carrier. Example…..The Hyundai Genesis is an excellent car. It delivers all the specs of some Mercedes for 30-40,000 less. The problem is that Hyundai, no matter how great their cars are now, will always be looked at as the cheap car with a great warranty ( much like TMobile, the cheap company with great customer service). They even took their logo off the back of the Genesis. Face it, driving a Genesis doesn’t make your d*** hard,to coin a phrase. We had the first Android phone but because we market like sh**…people think Verizon was the first. The Galaxy S and the MT 4G are GREAT phones on par with the EVO, but because they have the robot prance around in the commercials, people think it’s cool and ground breaking. We, as a nation of consumers are idiots….Jack in the Box was reeling from E-Coli deaths and very bad publicity and what was their answer???? They brought back the fuc*ing clown and now business is great !!!!!! T-Mobile had flagship devices in the past ( remember when the Sidekick was young Hollywoods phone of choice? It was the iPhone before the iPhone.) to no avail. Perhaps we have gone as far as we can, ON OUR OWN. Merge, change the name, My Touch/EVO/Galaxy the hell out of it. Get an aggressive marketing campaign ( Droid, iPhone, remember the Chocolate???) and make it cool or smart to have T-Mobile (or whatever the name will be). We have tried being cheaper. We have tried being easier (flex pay). Much like the a woman or man who is cheap and easy, you would sleep with them but never marry them.

    • TedC

      The perception of TMobile being inferior is accurate from a coverage standpoint. While every carrier has coverage issues TMobile has by far the most of the big 4. They are stuck between having worse coverage than any of the other 3 majors and being more expensive than the pay-as-you-go carriers (Cricket, MetroPCS, etc.). That’s a position that is death in the marketplace.

  • JohnJacob2342

    T-mobile can’t get sold to Sprint because I use to work at Sprint and quit because I got to stressed out working there. So if this merger takes place I wonder if they will look pass my previous status at Sprint.

  • Gaerielsky

    If Sprint buys TMo I’m moving to Verizon and I’m not sure if I’d go for a Droid or iPhone. I’ve been with TMo since Voicestream was it’s name and have left and come back (from Nextel – horrible service). Just get more cutting edge phones. Hell, you can even up your rates if you have better phones.

  • Bluerave007

    I was with Sprint for 8 years before switching to Tmo last August. I did not have any problems with Sprint, in fact I found them to be very accommodating. Sprint coverage was fine in the U.S., but nonexistent internationally. My Sprint phone (palm 800w) is a brick in Japan, as expected, however I could use Skype via wifi with relative ease. I plan on going back to Japan in the near future and an curious how Tmo will work. My whole reason for switching was the international coverage with the option of switching to a local SIM card. I wonder how it will affect Tmo’s international coverage if the two merge. Perhaps they will start a line of GSM/CDMA phones? Could be interesting…

    • Guest

      I was in Japan last year and had a very difficult time getting a local SIM card. I must’ve went to at least 6 shops representing all the different carriers, but none of them had SIM cards available. In the end, I was forced to roam using my Blackberry 9700. I thought it was very unusual that I was getting roaming reception but they didn’t have any SIM cards to purchase. I think I just found the reason why on Softbank’s website. (*1 3G SIM cards are available only at airport counters. You cannot receive it at SoftBank Mobile Shops in town or by delivery. http://www.softbank-rental.jp/en/phones/sim3g.php) My advice is to get the SIM card at the airport, as they recommend. Also, if you have a wifi-calling enabled phone, that may come in very handy for you.

  • DAVID H

    TELLING IT LIKE IT IS

    http://market-ticker.org/akcs-www?singlepost=2452436

    The problem with such a combination is that T-Mobile’s network is GSM-based while Sprint’s is CDMA and (for those still on legacy things from their previous combination) iDEN.

    The fun is that half their userbase would have to re-equip no matter which way this goes. That’s not so good, and harkens back to the hilarity that ensued when they bought Nextel with their iDEN infrastructure. That combination was a flat-out disaster.

    T-Mobile, for its part, is bleeding customers. Why? They’re pricing as a premium carrier like Verizon or AT&T but aren’t equipped like one. DT is simply nuts with their pricing considering the dramatically inferior network on a data-centric comparison. Huge swaths of their data network are still GPRS (~40kbps!) since DT didn’t bother going to EDGE in outlying areas as AT&T did (which would get you into the ~110-150kbps range) and as such outside of major markets their data service sucks to the point of being functionally unusable.

    Well that’s fine if you’re half or 3/4 of everyone else’s price like the MVNOs are – but they’re not. And many of the policies T-Mobile used to have (like being ok with you tethering your PC via the handset and even supplying handsets with tethering installed and supported from them – a practice that went all the way back to the Nokia 6161 “candybar” phone and continued up through the Windows Mobile 6.1-equipped HD2) have disappeared. Now they’re actively content-examining like everyone else and attempting to force data upgrades for tethering on a “for fee” basis, which means you may as well go over to Sprint and buy their EVO or similar – the money is roughly the same and the data coverage is dramatically superior, especially outside of major metro areas.

    If I’m going to pay as much as AT&T or Verizon and I don’t get anything better then why would I buy from T-Mobile? Arguing “The largest 4G Network!” may be good advertising copy but as soon as you drive 10 miles out of town your so-called “4g network connection” turns into a 40kbps – or slower than an old dial-up modem – dinosaur!

    I’m not kidding on that, by the way. I travel a fair bit and I’m a T-Mobile customer. If you have a legacy grandfathered deal they’re still ok. But if you don’t they’re simply not competitive. I’d either go with Sprint or, if I didn’t want a contract, Virgin Mobile with their Android handsets for $60/month “all you can eat” and a network that is actually 3g speeds in most places, and where it’s not, has at least ISDN speed capacities. T-Mobile cannot compete with this today for new subscribers, contract or no.

    So from my viewpoint here the deal sucks but Sprint would get a hell of a subscriber boost and the stock will likely move big if it happens. For this reason I’m interested in a speculative play.

    I like the April $5 calls at 20 cents. If there’s no transaction by expiry I’m willing to do it again for the August’s, provided I can get it around that price. On the Aprils there’s no good sale on the other side to offset (the $6s are three cents) but if the Aprils expire worthless and you can do the August $5/6 bull call spread for less than a quarter that looks good too. If a deal is announced I think you’ll easily see $6 almost immediately, and it’s entirely possible the stock challenges the three-year highs near $10. Yeah, that’s nuts, and there’s no support for it on the fundamentals (at all), but the tie-up would put Sprint in a position to have a customer base that rivals Verizon and AT&T – which is exactly how you’ll see it positioned and “sold” by the street.

    This is a highly speculative play and thus is one to play “small ball” with, as it’s one of those deals that if it hits is a 4 or 5:1 payout, but if it’s a miss you will get nothing. And while I think Sprint would be absolutely insane to do this transaction unless they can steal the deal from DT, one cannot ignore the possibility that DT sees the writing on the wall. By an EBIDTA analysis DT has lost half of what they paid for Powertel and affiliates originally, and there’s only so far you can go throwing good money after bad.

    Were I DT I wouldn’t do this deal. I’d instead cut prices and try to cannibalize the MVNOs, roll EDGE everywhere right now (that’s small ball on money as it’s a software change) and get more-aggressive with the 3g/4g roll. At the same time they must toss the punitive policies and explicitly and publicly go back to how it used to be with them, where their handsets supported tethering and similar uses. Use the “soft cap” system they have now (they throttle you but not bill you if you use too much data) but increase the cap to 150% of the most-generous major competitor at the same time. The intent would be to aggressively attack the “big core” competitors’ most-lucrative customers – the business and professional who can get rid of a data connection (e.g. his “plug-in dongle” for his laptop) and device. To do it you have to not only hit all the big markets though you have to get rid of the GPRS stuff – nobody’s going to deal with that in today’s world, so the commitment to be “at least” EDGE everywhere has to be made and kept on an immediate basis. The gambit is that such an offering can be put forward profitably, and intentionally luring the most-lucrative customers from other carriers won’t leave them DT an overloaded network they can’t pay for and thus trash their reputation further while failing to bring in the requisite revenue.

    The credit markets are reasonably-favorable to financing such a build, but the risk – if you fail – is considerable. The problem is that DT has pretended for far too long trying to be a Tier 1 player without actually being one, and their reputation – flashy advertising aside – may be too far gone to be salvaged.

    Contrary to popular belief the issue is not spectrum – it’s build-out and the business decision not to build EDGE network-wide. T-Mobile just is NOT competitive with 40kbps data speeds, and once outside of major cities, even on the interstate system, that’s what you get, all their advertising aside.

    • TedC

      Dead on. The only thing I would add is that even voice coverage is inferior. TMobile is stuck between first tier carriers and the PAYG (pay-as-you-go) carriers (which are not all MVNOs (Mobile Virtual Network Operators) since MetroPCS and Cricket actually have a lot of their own towers and backhaul) both on a data basis and voice. They either have to lower prices to compete with the PAYGs or make some significant investment in coverage (data and voice) to compete with the big guys.

  • http://www.facebook.com/zedklind Kevin Michael Lind

    all you people saying that sprint customer service sucks and tmo has a way better one think that if the merge goes through it will be the end.. why? is there not a possibility that sprint wants tmos customer service? could they not use tmos cs instead of their own crappy cs? honestly ive been with tmo for 5 years. they had a great phone that was HUGE. sidekick. everyone wanted it. they need a new marketing plan for newer phones. maybe the mytouch line needs to die and extend the G line. make it all vanilla and market that.. “want an android phone thats not bogged down by crapware? go tmobile and get vanilla, its faster. we gaurantee.” that could work! keep android the way it should be, crapware free. its linux.. it should be customizable to our own needs.. and those needs are blowing the competition out of the water.

  • http://www.facebook.com/zedklind Kevin Michael Lind

    all you people saying that sprint customer service sucks and tmo has a way better one think that if the merge goes through it will be the end.. why? is there not a possibility that sprint wants tmos customer service? could they not use tmos cs instead of their own crappy cs? honestly ive been with tmo for 5 years. they had a great phone that was HUGE. sidekick. everyone wanted it. they need a new marketing plan for newer phones. maybe the mytouch line needs to die and extend the G line. make it all vanilla and market that.. “want an android phone thats not bogged down by crapware? go tmobile and get vanilla, its faster. we gaurantee.” that could work! keep android the way it should be, crapware free. its linux.. it should be customizable to our own needs.. and those needs are blowing the competition out of the water.

  • Hoop327

    I was with Sprint for a few years until I had my first true customer service issue that showed me who I truly was just another number that pays the bill. The problem was a easy fix, but you have to care on the phone as well as in the stores. I payed the early termination fee on two phones and moved on to Nextel the customer service was better, then Sprint purchased Nextel and once again I payed and early termination fee on two phones not wanting to deal with Sprint. I moved on to now my favorite cell phone provider out of all of them, because I tried them all under one name or another. The customer service is superb on the phone with customer care as well as in the stores. This news is very disappointing to hear T-mobile and Sprint. The problem we are having at T-mobile is so so products nothing cutting edge. Lets get some high end phones in store instead of on line. People stand in line for products that look good, new tech, and advertisement to match.

  • ArkAngel_X

    I will say this, If Sprint does happen to buy out T-Mo, i will most likely be moving to Verizon, But, with the way T-Mo is going LTE, i wouldn’t be suprised if somehow Verizon pulled the rug out from under Sprint and bought T-Mo, hell if T-Mo and Verizon did some sort of merger or buy out, yeah people would have to upgrade phones in due time, but then we would have one hell of a super company, “America’s Largest and Most Reliable 4G Network” would be one hell of a show-stopper.

  • noeallstar3

    Hey, I’m paying 103 for 1000 mins and a grandfather android play with t-mobile and everyone is paying 80-85, hmmmm

  • noeallstar3

    Hey, I’m paying 103 for 1000 mins and a grandfather android play with t-mobile and everyone is paying 80-85, hmmmm

  • Anonymous

    Why can’t sprint die? Lol. They couldn’t stay afloat so they merged with Nextel now this?? Uh oh, I no likey

  • Anonymous

    Perhaps it’s best to revisit what was reported at the end of January to figure out where things are going.

    Remember that Obermann (the boss of DT) has his own head on the chopping block (DT, like Sprint, lost money). IMO, Obermann is looking at the U.S. operation to salvage DT’s numbers.

    As the pressure mounts on Obermann, so too is it on Humm’s head. What’s it like for them?

    Well, imagine yourself on the T-Mobile submarine “cruise ride.” Obermann is the captain, Humm the XO. Something is amiss on the boat and it’s in an uncontrolled dive. You are heading deeper and deeper, where you know the sub will explode (merger, sale, some other radical change).

    Sidenote: We are lucky, sitting all comfy in our escape pods, ready to press “eject.”

    ________________________

    NEW YORK — T-Mobile USA, the country’s fourth-largest wireless carrier, has some tough marching orders from its German parent company: do a better job of keeping your customers while cutting costs. And don’t expect help from Germany.

    Rene Obermann, the CEO of parent company Deutsche Telekom AG, on Thursday said the goal is to have T-Mobile USA increase revenue by $3 billion by 2014 while cutting $1 billion in costs.

    The goals for new T-Mobile USA CEO Philipp Humm come after two years of flat revenue for the company, which is struggling to compete with much larger rivals AT&T and Verizon Wireless. A decade of fast growth is behind the industry, and most Americans already have a cell phone.

    (ItsMichaelNotMike bonus commentary: Recall what I said last year and keep saying. The market is flat, there’s only so many cell phone customers out there and the carriers are simply fighting each other to get the customer to switch. That’s why the two year contract is critical and why carriers got rid of one-year deal. And this also why carriers have retention departments, to do anything to keep the customer from switching.)

    Bellevue, Washington-based T-Mobile USA’s subscriber count has stalled at just under 34 million, though it posts consistent profits.

    Humm replaced T-Mobile USA’s longtime CEO, Robert Dotson, in November 2010. Humm previously headed Deutsche Telekom’s German wireless arm from 2005 to 2008.

    Now that the pool of potential new wireless subscribers is smaller, a key objective for Humm is to persuade T-Mobile subscribers to stay. The company has the highest “churn,” or percentage of subscribers who leave every month, of the four national carriers.

    Obermann said last year’s (2010) churn rate of 2.3 percent for subscribers on contract-based plans is “just not acceptable,” and the goal is to reduce it to 1.8 percent by next year. That would bring it more in line with competitors.

    Sprint Nextel has managed a similar reduction in churn by focusing strongly on improving its customer service. But Sprint took two years to bring churn down the same amount T-Mobile aims to do in one year.

    Analyst Jan Dawson at consulting firm Ovum said the reason the three bigger carriers have lower churn than T-Mobile is that they’ve been more intent on retaining customers.

    “From that point of that view, it’s about time that T-Mobile put the same level of operational focus on churn,” Dawson said.

    Speaking to journalists ahead of an investor meeting in New York, Obermann said T-Mobile USA aims to gain market share in wireless Internet access, with the help of inexpensive smartphones and data plans.

    But wireless Internet access is a tough field. T-Mobile USA was late in building out its wireless broadband network, and coverage still lags those of the major players.

    T-Mobile doesn’t do a lot of business with corporations, who are big users of wireless laptop modems and smartphones.

    TMOUS isn’t able to sell the hottest smartphone, the iPhone, and will soon have to contend with not just one but two competing carriers who do have the phone, since Verizon Wireless will start selling it in two weeks.

    There have been reports over the last year that Deutsche Telekom has been looking at radical moves to let it get more value out of its U.S. holding, including a possible combination with Sprint Nextel or some other U.S. partner.

    On Thursday, Obermann signaled that the parent company is trying to make the best of the situation by letting T-Mobile USA stand on its own legs.

    If it needs to invest, perhaps to buy more airwaves to use for its services, it should finance that on its own, he said. He said that could mean selling cell towers to a cell-tower management company, then renting space for antennas. That’s a common practice among wireless carriers, and Obermann said T-Mobile USA hasn’t necessarily acted in the most efficient way by keeping ownership of many cell towers.

    T-Mobile hopes to cut the $1 billion in costs in customer service by forestalling and fixing many of the underlying issues that customers call about. Eventually, that could lead to job cuts, Humm said.

  • Anonymous

    By the way, I agree with what others have said (Wall Street Journal, etc.). Any T-Mobile/Sprint financial transaction is not going to affect T-Mobile US customers because Sprint and T-Mobile would continue to operate as separate divisions, if you will.

    Yes, over time administration, customer service and other behind-the-scene operations will become one, but that will not affect the user experience.

    This makes sense to me because the two technologies are incompatible. Rather than trying to hurriedly convert subscribers and handsets from GSM to CDMA or vice versa, it’s better to keep them separate and technology-wise let the two companies act independently.

    In other words, all stores would be rebranded “TMo-Sprint” and the handsets would all say “TMo-Sprint.” Inside the handsets, however, they can remain CDMA AND GSM. The CSR can recommend whatever phones would would work best in the customer’s area.

    Or maybe there’s technology that permits both CDMA and GSM chipsets to be installed inside a handset. The the “dual-signal” phone can seamlessly switch between the two depending on need (signal strength). When inside a building if CDMA gives a signal but GSM does not, the phone can handover the call, so to speak, from GSM to CDMA.

    That would be a pretty slick move to me, T-Mobile / Sprint merging their coverage areas to where the competitors can’t compete with the size of T-MoSprint’s coverage map. And what I would call “CDMA-GSM switching technology” could advertise “far less dropped calls than our competitors.”

    Where a merger also makes sense is that TMo-Sprint would have bigger clout in terms of marketing, handset development and acquisition, cost cutting (e.g. rolling separate departments into one), and eliminating duplication.

    Although I don’t like the old Sprint (from when I was a customer in 2003), in 2011 I can see where a merger makes sense. On the negative side, I am not too keen on doing a deal with Sprint, a company who for years abused its customers. While that’s something we might over time forgive, we will never forget.

    (IMHO the biggest sin a business can commit, justifying it being shut down, is mistreating and abusing its customers, the very people who are paying their salaries. A company should be closed down when it behaves as if it is doing me a favor allowing me to pay for its services.)

  • Michael

    This deal will not happen, doubt very seriously that Sprint would want to change over their network or even tmobile to GSM/CDMA….this guys knows nothing of how cell phone technology works or else he wouldn’t suggest such a dumb idea. Also there is a proprietary matter from the FCC that would have to be resolved, so like I was saying this guy is about as intelligent as my left nut!

  • Guest

    The reason lower prices, newer headsets, nice customer service, and fancy advertising with Carly are not winning new customers is basic. T-Mobile still has a much smaller network footprint than some of the other providers. And when it comes down to it, if your phone can’t connect reliably to a tower AND reliably transfer between them, it is just a worthless brick.

    T-Mobile additionally shoots themselves in the foot by not having full roaming on their prepaid plans.

    T-Mobile is so focused on new technology that they seem to have forgotten about the basic idea that got this industry so profitable: make a successful telephone call from almost anywhere.

  • Guest

    The reason lower prices, newer headsets, nice customer service, and fancy advertising with Carly are not winning new customers is basic. T-Mobile still has a much smaller network footprint than some of the other providers. And when it comes down to it, if your phone can’t connect reliably to a tower AND reliably transfer between them, it is just a worthless brick.

    T-Mobile additionally shoots themselves in the foot by not having full roaming on their prepaid plans.

    T-Mobile is so focused on new technology that they seem to have forgotten about the basic idea that got this industry so profitable: make a successful telephone call from almost anywhere.

  • http://news.netapex.org NetApex

    No real way to judge what would happen other than.. prices would go up. After all, if the lowest two denominators don’t have any one below them nipping at their heels, then their wont be a reason to keep prices lower then the guy below them. http://news.netapex.org/?p=883

  • Ms.Khmai

    Sprint Sucks…their reception is wack…this is 1 loyal customer they’re going to lose if tmo merges with sprint

  • http://www.businessoftware.com/tchposhardware.asp Point of Sale

    As a T-mobile customer, the only thing I’m worked about is customer service. I have had awesome customer service with T-Mobile…I would hate to lose that with any merger.