Softbank purportedly in final stages of talks to acquire T-Mobile

2012-10-15T065010Z_01_TOK307_RTRIDSP_3_SPRINT-SOFTBANK

One rumor that just won’t go away recently is the speculation surrounding Softbank/Sprint’s intention to buy Deutsche Telekom’s controlling share in T-Mobile U.S. And just because it’s Christmas Eve doesn’t mean that those rumors are going quiet.

Recent information passed on to Nikkei (as reported by Reuters) suggests that Softbank is in the latter stages of discussions with Deutsche Telekom about buying the now-popular Uncarrier, T-Mobile.

There are problems however. As we already read earlier this month, despite Softbank’s CEO being keen to push through the deal, it would require loans totalling around $20 billion. The company is allegedly courting 5 different banks to finance the deal, but has openly said that it wouldn’t be willing to accept the risk of paying billions compensation if the deal goes south. Which it could quite easily do.

I – along with many of you – am genuinely hoping this rumor goes nowhere and T-Mobile continues making the moves it has done in 2013, through next year.

Via: Reuters

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  • UMA_Fan

    I don’t think DT has this ‘itch’ to get out of the US like many people make it seem but they’re realists and are for anything that’s good business sense. Before the att merger DT was faced with buying spectrum with little hope of a good return then att came in with their huge offer and the largest break up fee in history relative to sale price. It made sense it wasn’t a deal of desperation. Tmobile is literally on Sprints heels right now and has very likely chance of getting a nice chunk of market share based on their current path alone. 5% more market share would be huge even if they were still number four. So whatever discussions in merging with Sprint they are having I would be shocked if Tmobile isnt approaching it with some kind of leverage. They just need some of that 700mhz spectrum and they don’t even need to partner with anyone else

  • Metro PCS

    I just don’t see it. I like having four major choices, not three, just means rising prices for the consumer. If Softbank wanted to buy T-Mobile, why didn’t they do that first, instead they borrowed $21 billion to buy 80% of Sprint and brought them to a current standstill with their network upgrade. A more likely bet is a buyout from Dish Network so they can use their spectrum and bundle cell/sat services. Dish already has $20 billion in credit lined up.

    • jay_max

      I prefer neither, but given the choice, Dish seems the lesser of two evils.
      I absolutely loathe Sprint. I’d be very tempted to move to AT&T if this merger is approved. (I can’t believe I just wrote that)

      • Rand0m3

        I would be on ATT (which I dislike only slightly less than Verizon because of the devices I tend to prefer being on ATT) before the ink dried. Sprint is my LAST choice for a provider. They may have changed since I left Soooo many years ago but I hold grudges for quite a while and wouldn’t go back unless the choice was that or no service (and it would still be a couple of months of looking for alternatives like going back to carrier pigeons or smoke signals) before I did it.

  • fsured

    Nothing stays the same when big mergers happen. Look at banks. They send all kinds of notices to the customers saying nothing will change and they will have all the benefits of the purchasing bank. Once the deal is done they slow shut down the programs from the previous bank and back track from the notion that nothing will change. Not to mention the joblosses that follow. It’s b.s. and to think Softbank will keep the same policies as T-Mobile has now is foolish. If they wanted to compete with the same pricing and plan structures they would have done so. They earn more money trough contracts and will need that revenue to pay back the 40 billion in debt they would gain from the purchase of Sprint and T-Mobile. That does not include the debt that would come for making the networks compatiable.

    If they were to leave T-Mobile alone and have it run as an independant company I could be infavor of this. They can market Sprint as the premium carrier and have T-Mobile to attract the value oriented customers. Softbank would still own both companies.

  • Jaime

    If this deal goes through, I will go to AT&T!

  • Frank

    The nicest thing about “no contract” plans? I will not have to be a $print customer for any longer then 29 days.

    Nobody wants to be a $print customer. Look at their numbers. Having been a $print customer in the past, I’ll not hesitate to go for the door.

  • jdubtrey

    Sprint customer here…

    Softbank might be open minded enough to stick with whatever approach is working best between TMo and Sprint. There’s no reason why Softbank has to be married to Sprint’s roadmap as opposed to TMo’s as Sprint has only been in softbank’s folio for about 6 months.

    However,and this has been tangientally in a few posts, Sprint and T’o keep EACH OTHER’S prices low. Either one no longer existing would be bad for all of us.
    As a Sprint user, I am as much if not more opposed to this deal as many of you.

    • philyew

      It isn’t just low prices that are the issue, the TM drive to change the way that the market operates is what I fear most will be the casualty.

      With three competitors of almost equal size, any one of them could use pricing as a short or long term competitive strategy, but none would need to dispense with contracts.

      If device prices start to fall again over time, it may once again become an option to use the subsidy con to lure customers into a contract.

      All the ugly facets of the carrier-consumer relationship will be reinforced. I’m hoping that TM’s underdog presence continues long enough to drive those things out of the market and make them very difficult to return.

  • trife

    The real bastards here are DT. I understand business is business, but sh*t or get off the pot already–either give up TMOUS or stick with it, invest in it fully and watch it grow. Enough of the dillydallying.

    • philyew

      DT spent their big investment when they bought into the market acquiring Voicestream and other components to make up TM US. It cost them $55 billion.

      Despite growing by almost 40 million customers, the whole company is now worth only around $30 billion. Until the reverse merger with MetroPCS allowed the company to be publicly listed, DT carried all the cost of investment in growing the company.

      They have therefore been chasing what turned out to be a bad investment for them for almost twelve years.

      Since the takeover offer from AT&T failed, DT received cash and spectrum worth $7 billion in the break up settlement. They immediately started to use the spectrum and $1.4 billion of the cash to boost the network with the deployment of LTE, which had previously not been possible because of the lack of available spectrum. That was a critical move as they would cease to be competitive with the other market leaders, if they had no LTE.

      The company recently added a further $4 billion in funding from a common stock issue and the sale of senior notes and that money is to be used on acquiring more spectrum to continue the network enhancement.

      I think characterizing DT as bastards doesn’t reflect the reality of the situation. They made an ill-advised investment, and have struggled to put it right. Meanwhile many of us in the metro areas have had pretty decent service at a bargain price while they have chosen to work the budget end of the market in that effort.

      Over the years, it’s been rumored that DT have talked to a number of companies interested in buying them out, it’s not really DT’s fault that the only one so far willing to cover their losses was AT&T, or that now the only party willing to make public their active interest is Sprint.

      • trife

        I definitely see what you’re saying, and for the most part I agree. But can’t they be held accountable for getting themselves in a position where an AT&T buyout was going to be the only way that they’d be able to cover their losses? Could they have done more from the beginning to avoid being the #4 carrier for so long? Isn’t DT the reason that TMO is the #4 carrier in the first place?

        I guess my point is that it sucks that because of DT’s bad investment (or more likely bad handling of that investment), they’re consistently open to cashing out at the expense of the customers who kept them from completely drowning for years. And I see what they’ve done as far as investing to make TMOUS look more appealing to potential buyers, and I can accept that those actions are simply business. But for the end user, it still stinks having that air of uncertainty lingering around all the time. I’d rather DT go all in or just go away, but I guess that’s why I’m no businessman.

        • philyew

          When TM completed the acquisition of Voicestream in June 2001, including the markets served by Powertel, which it also acquired at the time, it had just 5.4 million subscribers. It now has 45 million. TM achieved most of its growth by building customer base, rather than by acquisitions, so it could be argued that DT did make an honest effort to grow.

          I have no idea what made DT think that the valuation they placed on Voicestream and Powertel was good value, other than the following statement that they made in the 1st June 2001 press release announcing the completed acquisition: “VoiceStream, with its affiliates, owns licenses to provide service to more than 273 million people, covering approximately 97% of the U.S. population.”

          Unfortunately, that spectrum (PCS 1900 MHz band) wasn’t capable of supporting the deployment of a 3G network, so they waited until September 2006 to bid in the FCC auction of the AWS (1700/2100) band. They spend over $4 billion acquiring licenses and over $2.5 billion deploying the equipment to deliver it.

          Part of the problem with that auction, however, was that other government agencies were still using the spectrum and didn’t rush to clear the airwaves. In fact, it wasn’t until May 2008 that TM was able to launch its first 3G service. Way behind the rest of the market leaders, despite their reasonable intentions.

          Arguably, we wouldn’t be fighting for the continued existence of a fourth nationwide carrier, if DT hadn’t made that questionable investment and persevered to grown 5.4 million customers into 45 million. There was nothing about the state of the wireless market in 2001 which suggested that this would be how things grew and turned out.

          As far as I can see, it is what it is. I can’t blame DT’s management for trying to make the most of a highly dubious investment decision on behalf of their stockholders.

          I keep hammering the point that, with less than half the number of subscribers compared with AT&T and Verizon, with each paying substantially less for service, TM has to keep focused on the urban markets where the vast majority of the potential customer base resides and where it costs less per unit to provide competitive network services because of the high population density and the narrow geographic spread. Assuming for a moment that all of TM’s customers live in these larger markets, there are still over 180 million people living there who don’t have TM service. Compare that to the rest of the country where there are less than 90 million distributed over huge geographic spreads.

          With that in mind, I actually think that what TM is being allowed to do by DT is quite something.

    • jdubtrey

      I think you have touched on something that many here aren’t recognizing.

      It is apparent that DT wants out.

      Divesting is the priority unfortunately, which means that we (consumers left behind) probably aren’t much of an afterthought.

      As a Sprint pre-paid customer, I’m afraid of the power this new company would wield: nearly 70% of the pre-paid market.

      If DT sells to Sprint, the days of $30 5GB plans are over, I think.

      • UMA_Fan

        Historically however DT hasn’t made rash impulsive decisions. Everything they’ve done so far has been well thought out. They could have just as well sold tmobile instead of going through the hassle of hiring John Legere in the first place and buying Metro PCS. The Att deal was good business sense if you consider the premium they were willing to pay and the break up fee. Whatever come out of Soft bank I think DT will have a good idea of what they’re getting into

        • jdubtrey

          When the AT&T deal failed, it wasn’t surprising that T-Mobile would look to strengthen itself in the short term, while still keeping an eye on getting out altogether down the road.

          Making an agreement with AT&T just hoping to garner the breakup fee would be a bad faith negotiation. DT was obviously willing to sell, and probably still is for the right price.

          Sprint and TMobile competing for customers helps us (as consumers) but probably puts a ceiling on what either can do to cut into VZ and AT&T’s market share. Softbank and DT know that.

          We just hope that the Fed doesn’t let them do anything about it.

    • tomarone

      Wrong, because this is typical business in the US. Look at any tech field in the last 40 years, it goes through this, company buying company until there’s essentially nothing left.
      The real bastards are the government for allowing this to happen. As long as company A can afford to buy (leverage, bank loans etc) >50% of stock of company B, and company B is a good competitor to company A, then they will do that because greed trumps all other good things in this world we have here.

  • landmarkcm

    Sprint is the apitamy of incompetence. People are so tired of there “network vision” excuses. Im sure one day they will finally get it together & they can no longer make claim to being the unlimited value leader either. They are the worst carrier here in Vegas still and in major parts of CA etc. There LTE in some areas where its up is not any faster then Tmobile’s HSPA+ which I am happily using my Moto G on. I mean I guess I wouldnt care to much about the merger as long as theres no major changes. Theres no way there going to eliminate the GSM etc. I mean that would cause alot of unhappy people. They cant be that stupid. Tmobiles network is the growing faster one right now over Sprint’s.

    • grammard00d

      Erm… “epitome,” “their,” “I’m,” “their” again, “it’s,” “wouldn’t,” “too,” “there are,” “there’s,” “they’re,” “a lot,” “can’t,” to name a few…

      • landmarkcm

        Aww lol gotta love it. I knew I spelled epitome wrong but I couldn’t go back & edit it. Your response has what to do with the topic on here though..

  • Bori

    What would they call this “marrige”, SprinTmobile? ??? Eeek, not liking these rumors..

  • Kuma951

    We gonna stop this merging as we did AT&T and t-mobile in 2011, we have sign Petion to FCC, FCC abd DOJ are will listen to people, so we should stand together as we did in 2011. Sprint get f**k off. We love t-mobile

    • Joshua

      Let’s hope Dish Network owns T-Mobile verses it being Sprint!! Sprint smells bad.

  • Joshua

    Please please please Dear Heavenly father do not allow Sprint to buy out T-Mobile, instead only allow Dish Network to buy out T-Mobile!! Dish/T-Mobile is the best Combination to go with!!

    • msohail

      Dish is even worse .. they only thing they will do is to increase the price.

  • Kpennett

    If it Didn’t Go through For AT&T, It Shouldn’t Go through For SoftBank/Sprint!

    • calvin200

      You can wish that, but this proposed merger is far different than what would happen with ATT

  • http://www.laag.us/ www_LAAG_us

    Right now there are 167 comments on this topic. How many are in favor of the merger? All DOJ needs to do is read all the negative posts on this issue. The problem I have is that the TM and Sprint tech is not at all compatible. The other problem is they want to become the “third” major player the easy way. Vacumin up customers thru merger. They need to do it the hard way by being the “un” carrier. Most of the off contract ATT people went to tmobile if they knew what was good for them (and unlocked their phone and got off the upgrde marry go round). Tmob Coverage is ok but not as widespread as ATT (in semi rural areas of So Cal.). Anytime you decrease competition you raise. prices. Period. Now the next thing we need to do is stop all the spectrum squatting. Use it or loose it. The fact that DT wants out of TMob is problematic. I dont know what you can do about that other than use the govt. to stop them from getting out. Thats not a good thing. Also with respect to Sprint I recon back to a day when they were doing lots of advertising and “un” carrier stuff (like tmob) but now that LTE is here they are all quiet. Hmmm.

    • jdubtrey

      “The other problem is they want to become the “third” major player the easy way. Vacumin up customers thru merger. They need to do it the hard way by being the “un” carrier.”

      I think some people are under the impression that TMo’s motives are different, more innovative or more noble than that of other carriers. Maybe they are to some extent, but the cold truth is that TMo had to differentiate itself to survive as the #4 carrier.

      There was a time when Sprint was that lone voice in the wilderness. When my contract with AT&T was up a few years ago, I was completely free to choose any carrier available. I chose Sprint, because I could essentially get a smartphone with unlimited everything (including unthrottled data) for $63 a month after discount and taxes. TMo couldn’t touch that at the time (I know because I looked).

      The $30 5GB plan that people love so much was TMo response to Sprint’s $25 300 min/Unlimited Text/Unlimited Data prepaid smartphone plan. That plan is now $35 and throttled at 2.5GB, but it doesn’t change the precedent they set.

      TMo does get a lot of credit for a continuing effort to separate the subsidy from the phone cost (something that AT&T and VZ trying to do and the main Sprint brand doesn’t do at all).

      What’s my argument? The point is that TMo and Sprint have both shown they can be progressive. However, either through growth, merger or acquisition, neither is going to have the motivation to be as innovative as they get larger. Customers of both would be better off if TMo and Sprint stayed right where they were in terms of market share. We all benefit from them fighting to keep every customer they have.

      Unfortunately, DT and Softbank know that too, and likely have other plans.

      • http://www.laag.us/ www_LAAG_us

        I dont disagree. Its like people arguing over IOS and android. Pick what you like. I do think its a ashame that we have to throw phones out every two years or if we change carriers (the exception being TM and ATT on GSM) I would like to have a euro model where you buy the phone you want (now or used) with the OS you want then pick your carrier. And for some reason the cellular coverage in EU seems insanely good when I have been over there compared to what I see here in the USA from TMOB

  • JNawaz

    I think T-Mobile USA should just spin off as a separate entity with the help of MetroPCS. Selling to SoftBank (essentially merging with Sprint) would do nothing but kill all the efforts set forth by Legere. Also, if I lose the ability to bring my own phone and inserting SIM card to use the device, I’d be very unhappy. I tend to use unlocked handsets more than carrier supplied ones. I’ll be stuck with what sprint will offer.

    • philyew

      They are already independently listed on the NYSE through the deal with MetroPCS. Deutsche Telekom remains the largest shareholder with a 67% holding. It is the possible sale of that holding which is attracting interest from Softbank and, perhaps, Dish Networks.

      There is nothing that can be done to prevent a third party considering a buyout. In this case, DT has sufficient equity to refuse, or accept and transfer effective control of the company, without reference to the other shareholders. Of course, federal authorities can and do oppose such deals where they represent a threat to market competitiveness, which is very likely in this scenario, given the comments of the DoJ when opposing the AT&T takeover.

      It would be surprising if DT were not looking for at least one other competitive offer before committing to sell.

  • Flyincloud

    NO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Rand0m3

    It would easily go south, didn’t one of those 3 letter agencies give as one of the reasons for the ATT failure that they wanted 4 major competitors in the market? They already own too much of another US mobile company to pull it off (in my non-expert opinion) which is why they aren’t willing to put up the money for the attempt. Although it seems the easiest way to make TMo (your competitor) lose customers for a while is to threaten to buy them and force them to go somewhere they have zero desire to be. So maybe that’s why this rumor won’t go away

  • Winski

    SoftBank WILL NOT BUY TMO US…. Legere won’t let that happen regardless of what the Press OR Sprint OR anyone else says… TMO US is having too much fun right now kickin a little booty..

    • calvin200

      Then maybe he should say it won’t happen. He hasn’t.

  • pips78

    Anyone notice that this rumor appears just about every year? Albeit it’s a little different this time around. It’s like the T-mobile USA being on the “top 10 list of companies that won’t exist next year” the first 3 years I worked here. Yet here i am. The fact that Sprint is now owned by “Soft Serve” changes nothing. This CEO “allegedly” is approaching banks like a shopaholic with awful credit desperately applying for credit cards online so they can complete their Walker Texas Ranger commemorative plate collection. They don’t have the money. And it will be shut down if they do manage to get it. Sorry Son! Your great empire and asspirations to one day rule the world with your buddy “Pinky” will have to wait and consist of a dismal Sprint for the time being. T-mo has changed too much in the industry to be allowed to be handed over to “Soft Lube” for 20bill. Which is insane btw. 20bill, seriously? We were crap back when the Death Star wanted us and they offered 39bill. Maybe I’m missing something here. Seems like they are just throwing out these rumors to gauge a response and have no intention to do anything but test our waters.

    • calvin200

      Sour grapes much? Things and dynamics have changed in the direction that this more likely. As far as financing and price–who wouldn’t have to finance and OMG a low bid offer. Who does that? Everyone.