Department of Justice expresses concerns over Sprint/T-Mobile merger in meeting with Sprint

hesse and son

When rumors of a Softbank takeover of T-Mobile first emerged, there were – as expected – mixed responses. T-Mobile is in its strongest position for years, and there are obviously concerns that the progress Magenta has made over the past 12 months could be negated by a takeover. On the other hand, Sprint is a “pile of spectrum” waiting to be used – according to Legere – and could prove useful to expanding the T-Mobile brand and philosophy further. Whatever the advantages or disadvantages there ar, there’s an ever-present stumbling block: Regulatory bodies.

Since the first day of rumors, we’ve all known that the U.S. government, FCC and whoever is involved could potentially stand in the way of any deal. It happened when AT&T tried to buy Deutsche Telekom’s controlling stake in Tmo back in 2011. It ended up costing the company a pile of cash and spectrum. The same could happen with Softbank’s attempt.

According to a recent report from WSJ (subscription required), Sprint and Softbank CEOs, Dan Hesse and Masayoshi Son, recently met with the Department of Justice to discuss their plans.

The conversation, which occurred in January, signals the seriousness of Mr. Son’s interest in a deal, but also underscores his highest hurdle. U.S. antitrust authorities believe the current lineup of four national carriers is important to maintaining a competitive market, and department officials indicated at the meeting that a deal combining Sprint and T-Mobile could face regulatory difficulties, the people said

According to the report, Sprint/Softbank has lined up around $31 billion in potential cash to fund the deal, and is very keen on making it a reality. But as already mentioned, regulatory bodies are not sure it’s the best way forward, not for the US market.

With the lack of any clear denial of a deal from T-Mobile’s execs, and the steady stream of reports regarding the ins and outs of a deal, it’s clearly moved past the stage of “no smoke without fire”. There is clear and real interest from Softbank to buy DT’s 67% share, and it’s doing all it can to ensure it’s in the position to do so. But, if the government is going to stand in its way, all the cash in the world won’t make the deal happen.

Stay tuned, this rodeo’s not over yet.

Via: WSJ

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  • mjs64

    I’ll break contract if Sprint takes over. Had them before and I won’t deal with them again!

    • Whiskers

      +1,00000
      And the same will go if Dish gets involved , i’ll gladly pay more money to another provider not have to deal with that misfit company.

      • philyew

        Seriously, if Dish bought out DT and Uncarrier continued, you would still go to AT&T or Verizon as a matter of principle?

        By the time anyone officially takes over from DT, you would be out of contract even if you were a legacy Classic plan customer, so why wouldn’t you wait to see how things went? It’s not like they could trap you into staying longer than you wanted. Even with the current contracts, a materially disadvantageous change entitled the customer to quit without penalty.

        • Whiskers

          Seriously , yes !
          Everything Dish offers is on contract , do you really think if Dish buys T-Mobile and has full control they will keep the no contract plans…
          My wife worked for Dish and they are all about them and once they have you on contract they know your stuck for two years while they make their profits.
          Why would they make their current customers have contracts and then have their cellular mobile service on no contracts. That would piss off the customers they have now to the point of leaving and Dish will feel the heat and change the no contract mobile service to Contract Plans just like everyone else does once they own T-Mobile.

        • philyew

          You’re missing my point.

          First, I said “if Dish bought out DT, and Uncarrier continues…” You wouldn’t have Uncarrier, if they re-introduced contracts, so you’re not actually answering my question.

          Second, they couldn’t tie you into a contract unless you were willing to agree. It would constitute a materially disadvantageous change, and even the current contracts allow customers to leave without penalty, if TM makes such a change.

          The point is, do you leave on principle just because Dish becomes the major shareholder, or do you wait to see whether they actually introduce contracts again?

          By the time they could formally take control, no one with TM service would have a current contract. It would be sometime in 2015, and all existing contracts would have already expired. You could only get in a contract with TM again, if you consciously chose to sign one.

          Understanding that, would you willingly pay more elsewhere just to avoid being a non-contract customer of Dish Network?

        • 21stNow

          21stNow says yes to your last question. I have no desire to be a Dish customer.

        • KlausWillSeeYouNow

          You’re absolutely right. I really like Dish – as my profile image implies. I want us ALL to be Dish customers. :-) Dish is a good company.

          If SoftBank backs off, T-Mo is as good as Dish’s. Here’s to hoping that happens!

        • KlausWillSeeYouNow

          Your experience with Dish runs contrary to literally every person I know, including myself, who has dealt (or in my case, continues to deal) with them. I’ve had some extremely atrocious experiences with T-Mobile at times, but I’m not a hater.

          I think you need to reexamine your position.

    • Wire

      Bye

    • philyew

      With the federal processes to be followed, by the time anyone takes over from DT, all current contracts will have expired so you won’t have to break anything.

  • Alex Zapata

    Surprise surprise!

  • hanfeedback

    Sprint cannot be allowed to buy Tmobile, it will leave us with a true duopoly due to Sprint’s fanatical mismanagement on literally everything.

    • bleeew

      2011-Your area will get WiMax soon!
      2012-You will get Evdo Rev B+LTE soon!
      2013-You will get upgraded LTE speeds soon!
      Sprint is always late when they announce something. They are slow at rollouts for bieng the 3rd largest carrier.

      • Jon

        If Im not mistaken isn’t sprint known as “the now network”? Oh the irony!

        • Justin747

          We used to call Sprint “The NOT Now Network”

    • superg05

      wrong sir duo is two=2 trio=3 try triad , triumvirate, trinity, triangle even better devils triangle but i agreei don’t want it to happen but if it does unlikely go through i want t-mobile at the helm also a 800mz band breakup package would be nice

      • Jon

        I’m guessing you didn’t understand what Hanfeedbacks comment meant?

        • superg05

          what that it would ruin t-mobile if not destroy it yeah i got that

        • Jon

          In a nutshell yes! Sprint is in debt and so is T-Mobile soooo if Sprint is left in charge to manage both companies then you get the picture.

      • hanfeedback

        At least Jon understood my point. Sprint buying Tmobile will leave just ATT or Verizon. i.e. my duopoly statement……..

        • superg05

          i did get it i just didn’t agree with the punchline amusing as it was

      • Trevnerdio

        800MHz is pretty useless. Sprint is the black sheep using it, inoperable with the other 3 carriers.

    • Deadeye37

      How about if Legere & his executive team takes over the combined companies along with the Uncarrier movement?

      • hanfeedback

        No, I mean you dont honestly think the majority of the initiatives set forth by Tmobile would stay if Sprint took them over do you? On top of that, Sprint has a horrible track record on pretty much everything.

  • Wilfredo Martinez

    The FCC and the Department of Justice should not allow such a deal to go through! 3 big wireless carriers do not equal competition, they equal collusion, let’s take a look at a northern neighbor across the border, Canada’s wireless industry is a PRIME example that 3 big super power companies would collude even without having to meet in secret meetings! No even if T-Mobile’s management were the ones in charge it still wouldn’t make this merger ok! The wireless industry is heavily consolidated already. Softbank wants to get bigger? Why aren’t they fiercely competing and challenging Verizon and AT&T. Invest INVEST INVEST. Not buy buy buy. These companies want the easy way out that only BENEFIT them. They need to benefit the consumers if they want to grow, make changes! Why should the U.S government give them a free pass to market power that in the long run would HURT consumers?
    If Softbank wants to continue this charade go ahead I’m sure they’ll have to pay a large break-up fee when the deal gets blocked by U.S REGULATORS.

  • S. Ali

    Legere has said it in dozens of interviews:

    1.) FCC needs to limit the amount of spectrum the Big 2 can buy. Future auctions cannot allow ATT and Verizon to get more than 50% of the available spectrum.

    -OR-

    2.) Allow these mergers to happen so that the smaller carriers can complete. DOJ and FCC must allow Sprint, TMO, USC, C-Spire and whoever else to merge so that they can compete.

    TMO quite frankly cannot compete without MONEY and SPECTRUM. They are $20B in debt and have no cash to grow. The ball is in FCC’s court. If they want to uphold the competition argument, then they must level the playing field. If they are unwilling to do this, then they must allow mergers. Simple as that. You want competition, then tell ATT and Verizon they can’t have all the spectrum.

    Fact is 3 carriers will not create a competitive market because collusion (like Big Cable) will force carriers to concede regional markets such that each carrier stays out of the other territories. See Canada.

    I’d like to See T-Mobile + US Cellular + C-Spire or T-Mobile + Dish, but NOT Sprint.

    • D Nice

      Ummm… Good thought’s.

    • http://manshu.me/ Himanshu Batra

      Republicans is the name of the game. !!!

      • KlausWillSeeYouNow

        …?

    • xmiro

      And that’s why I see a network merger as a viable option.

      1 network multiple operators using it MVNO style and splitting the cost of operating it.

    • Trevnerdio

      C-Spire is already a concoction of carriers…that would be interesting, and would get us right to the EDGE (see what I did there?) of Sprint’s subscriber base.

  • Cjpowers

    I would be ok with it if they keep t moblies gsm and cut sprints cdma network , and keep john.

  • Dark enV

    As much as I hate Sprint, I’ve been with them before, I see that this could potentially happen. But I’d only stay as long as all the T-Mobile people remained in charge. The fact is that Sprint owns a ton of spectrum that could help make a phenomenal network but Sprint’s rollout of LTE has been absolutely pathetic. If T-mobile were to gain access to all that spectrum we could really see something special, though there would still be a need for low band spectrum. In the end it’s up to the Department of Justice

    • xmiro

      chances are Legere and Neville Ray, the T-MObile network CTO, will take over they have all the qualities SoftBank CEO Son likes

      • philyew

        That’s possible, but what matters is the operational philosophy that they are responsible for implementing.

        Nothing about Softbank’s position in this market suggests they are interested in maintaining Uncarrier, and with just three major players in the market, they wouldn’t need to.

        • xmiro

          well with Framily Sprint is kinda close to T-Mobile prices, $55 1 line 1GB included – quite cheaper than VZ which is $90 for 1 line with 1GB of data.

          And if you spam enough people to join Sprint $25 per line with 1GB data

        • philyew

          Sprint has to be close to TM pricing right now, or they would be torn to shreds.

          With TM gone, customer volumes close to AT&T, and a competitive network boosted by TM’s spectrum, why would they need to maintain budget pricing? Why would they need to abandon contracts?

          If they can all settle down with a cozy accommodation delivering 40%+ EBITDA margin, you’ll never hear of Uncarrier again.

  • princedannyb

    I think they should wait for a reply from the FCC as to wether they will limit how much spectrum the big guys can get in the 600mhz oction before considering consolidation. I really dont like the idea of 3 major carriers. I feel bad for the people in canada with no unlimited data option and little compotition. And if the fcc did allow tmo and sprint to merge, wouldn’t that mean they would have to give up some spectrum?

    • superg05

      yes probably and most likely

    • OJ

      With Verizon temporarily debt burdened , you don’t think this is the best time to merge?

      • xmiro

        Merger gives T-Mobile more spectrum and revenue and scale, to lower costs etc…

        Tmobile CEO John Legere wants price war because he knows it’s what AT&T and Verizon are trying to avoid desperately.

        Verizon is negative ~$80 billion net tangible assets, and have another unrealized ~$100b in debt parked away on the books. So Verizon is living from cash flow only, even a $5 reduction in service plans would eat $6 from its yearly cash flow

        A T-mobile with low frequency spectrum in the 800Mhz from Sprint would be able to easily match AT&T’s network at minimum, eliminate a lot of the gripes people have and completely remove the biggest negative mark it’s known for. And if they’re adding customers without low-band spectrum how many would they add with?

        • philyew

          Sounds good, but with only three companies in the marketplace, how much would we have to pay for it and how much Uncarrier would be left in two years’ time?

          I don’t think any of us want a situation where the only thing that distinguishes the competition is the color of their logo.

  • sushimane

    This can be good for T-Mobile. Break up fee and spectrum lol. But if the FCC limit the big 2 on getting more then 50% of 600mhz that’s a goof place to start. When Softbank brought sprint it also got more spectrum from other sources so its already building up their network but its going slow. So if T-Mobile merge with more regional carrier like us cellular c-spire or whoever it can work but let see what happen in the future and the doj FCC.

  • Jon

    Another episode of as the mobile world turns. Tonight’s episode featuring Masayoshi Son and The Feds! No but seriously like most people here I agree T-Mobile should run things while sprint should just go away like Nextel…… T-Mobile could put all that wasted spectrum Sprint has to good use. I’m no tech wizard but how many bands would they have if this does happen

    • superg05

      10 bands combined

      • philyew

        What else is there, other than what xmiro listed?

    • xmiro

      700Mhz A band
      800 Mhz from Sprint Nextel
      1700/2100Mhz AWS
      1900Mhz PCS
      2500Mhz from Clearwire
      2600Mhz from Clearwire

      • vrm

        Phones will run out of battery before they can connect on a specific band.

  • Wilfredo Martinez

    “An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher costs for consumers.[1]”
    TAKEN OUT FROM WIKIPEDIA!

  • Bklynman

    I could see stink doing this,if SB,has already have up and running the right way,
    have SB,done anything to date to show they are even making a effort to fix stink?
    If not,why not? They should take any money they have rasie put into stink,get there
    network up and running,not go about buying another companyno matter who it is,
    1st,thing they shoud do fix there own house,before going out buying another one.

  • wsj

    Argument for combined carrier will not “market power” in any market. Argument against combined carrier will leave one carrier without any competition either AT&T (GSM) or Verizon (CD), unless combined carrier is going to operated both GSM & CD and that would be Sprint/Nextel all over again.

  • brian

    Can someone explain why if a deal was to initiate and then not go through – why there would be a breakup fee?

    I’m still unclear as to why ATT had to pay so much when the deal was blocked. And why did they have to give up spectrum? Im pleased this happened but still insure why. Was this pre negotiated in the contract? Or just normal biz practices?

    • xmiro

      Normal biz practice. The breakup fee is there to make sure the acquiring company doesn’t change its mind midway trough the acquisition process.

      In T-Mobile’s case executives at Deutsche Telecom were smart enough to take advantage of AT&T’s arrogancy believing it can lie its way to approval from the FCC and DOJ and negotiated great terms of the break up fee

    • Metro PCS

      Pleas do note the spectrum deal is for 7 yrs, then goes away from AT&T, good for now. DOJ to Softbank, why did you borrow $21 billion dollars to buy Sprint and not work on turning it around?

      • xmiro

        the roaming deal is for 7 years the spectrum AT&T gave up is permanent

        • Jay Holm

          Isn’t 700 band 12 from ATT interoperable with Tmo?

    • philyew

      It was pre-negotiated. The process was predictably damaging to TM, huge numbers of customers were lost during the 10 months of the process and immediately following. DT had no incentive to spend money to reverse the trend. They probably had a contractual commitment to limit losses but nothing more. Also the process excluded negotiations with other potential buyers until its resolution.

      Ironically, it was the break-up deal which proved to be the savior of TM. Without it, TM would be in terminal decline with no ability to deploy LTE. In that sense, AT&T’s attempt was the best thing that happened to TM.

      It’s likely that if Softbank were to initiate something now, they would require TM to moderate its aggressive Uncarrier policies, which would again be extremely damaging, thus warranting another break-up clause.

      • xmiro

        and the big ? is will Deutsche Telecom agree to moderate T-Mobile Uncarrier when it’s working so well and propping their wireless operations in Europe and what will they ask for in return :)?

  • KlausWillSeeYouNow

    DISH will make its move eventually, and save us from both Sprint and douch…er, “Deutsche” Telekom. And I’m pretty happy about that.

    I never thought I’d say this, but give ‘em hell, DOJ. You’re dead on. Preserve the Magenta Maverick!

    • Adrayven

      I like the DISH option even less than sprint. uck.. T-mo is much better off on it’s own right now.

      • fentonr

        I don’t mind a partnership with Dish, but I’d prefer T-Mobile remained owned by DT. Aside from wanting to sell to anyone with $5 and a shirt on their back, I like DT. Sprint is the single worst thing that could happen to T-Mobile and the wireless industry and Dish is a joke who would only make a mess of T-Mobile if they acquired them. I suppose I should get ready to get screwed by AT&T because it looks like Sprint might really try to take a run at T-Mobile.

        • sushi

          Or would like them to be their own company without DT being the parent company. The reverse merger is happening this year I think.

        • philyew

          If you’re talking about the reverse merger with MetroPCS, it completed last year, leaving DT as the major shareholder. Softbank now want to buy out DT’s holding.

          Between now and November, DT can only agree to sell its whole holding in a single transaction. After that they can sell it piecemeal, if they choose.

        • sushi

          ok so the new combine company of metropcs and tmobile is Tmobile Us. Tmobile us own 26% of the combine company while dt own 74% with the reverse merger tmobile us would be able to buy share of the company from dt until they would be a separate company. its almost like vodafone and verizon but for tmobile us to buy more share of the company would take the course of year or more. im waiting for this.

        • philyew

          No, the reverse merger was the way that DT acquired MetroPCS so that the resulting company retained MetroPCS’ listed status on the New York Stock Exchange. Had DT acquired MetroPCS conventionally, the whole entity would have entered private ownership here, just as TM had been previously.

          DT now own 67% of the company after their holding was diluted by an ordinary share offering late last year which raised funds to finance the spectrum acquisition deal with Verizon.

          The rest of the shares are owned by previous MetroPCS stockholders, or those to whom they have traded their holdings since the deal closed last year.

          By agreement with those stockholders, DT can’t start trading their holding in the open market until 18 months after the deal closed. They can, however, trade the whole holding in a single transaction.

          I’m not sure what you mean about TMUS buying more shares in itself.

        • sushi

          this is from what i heard that the 26% of the shareholder of the company bascially metropcs could acquire more shares of the company from dt. metropcs own 26% and dt own 67% of the company what’s the point of that if dt can own whole company so in my vision and past article it tells me that metropcs can acquire more of the company over the course of a years. you see what im trying to say?

        • philyew

          I think your mistake is in thinking that the current shareholders are limited to MetroPCS and DT.

          Prior to the merger MetroPCS was a publicly traded company, meaning it’s shareholders could range from hedge or public equity funds to you and me.

          After the merger these shareholders received 26% , of the new company. DT held the remaining 74%.

          In November, they raised additional funds for spectrum acquisitions by issuing 16 million new ordinary shares, which diluted DT’s holding to 67%. The new shareholders and those who previously owned MetroPCS shares are not a cohesive entity.

          For 18 months from the merger completion (i.e. until November 2014) DT are limited in how they can sell any part of their 67%. After that, they may trade any part of their holding as they desire. But there is no “MetroPCS” entity to acquire those shares. The various institutions, funds and individuals who currently own shares could expand their holdings, or one or more new investors could buy from whatever proportion of the DT holding would be made available.

          Right now DT is the majority shareholder and the balance is owned by any number of other institutions or individuals.

        • fentonr

          Reverse merger? I’m not sure what you mean, the T-Mobile acquisition of Metro PCS was a reverse merger.

        • KlausWillSeeYouNow

          What is there to like about DT? I like DT even less than Sprint!

        • philyew

          Sorry but that makes no sense to me. DT are presiding over changes at TM that have the potential to change the industry here fundamentally. Even when things were not great, they acted as a disruptive force which offered a low cost alternative and some innovative changes.

          What the heck have Sprint done for the consumer, before or after Softbank came on the scene, except respond to TM initiatives?

          There may well be a better majority shareholder to take TM forward, but if you’re a consumer, it sure as heck isn’t going to be Softbank.

        • OJ

          It’s only been 6 months since the purchase lol. I’d at least give them a year to see improvements.

        • philyew

          According to Softbank’s own supporting documents for one of last year’s earnings statements, their ambition is to be the #1 company – not just #1 mobile company in Japan, not just #1 mobile company in the world, but #1 company in the world. They show a chart with ExxonMobil at #1, Apple #2 and Softbank at #62.

          The same document shows they’ve being pulling down margins in excess of 40% since 2009. Uncarrier means being satisfied with lower margins, it’s part of TM’s stated objectives to alter the 40-50% margin culture in the US mobile industry.

          Softbank’s and TM’s stated objectives are diametrically opposed, Softbank won’t get to be #1 company in the world operating as the Uncarrier. If they take over TM, they will work to become just another AT&T or Verizon, or worse.

  • xmiro

    Feds want 4 national carriers, the HHI index they use already shows competition threat and market concentration is going up by more than double what HHI says is alarming.

    Another wireless company with nationwide coverage, would have to be brought in and helped by Sprint, probably for 5 years by being hosted on the TMUS/S network. Feds will probably want Sprint to release spectrum, and customers. SoftBank really wants T-mobile for the network probably not so much for the customers.

    And we have yet to see what Echostar/DISH CEO Ergen will do – he may put a bid for T-Mobile to start a bidding war and throw a wrench, again, on SoftBank like he did with Sprint and Clearwire so they overbid for T-Mobile. S

    And let’s not forget, Deutsche Telecom and SoftBank are still negotiating, Son doesn’t want a break up fee like that AT&T had to pay because he literally can’t afford it, and that would be one of the biggest sticking points unless DT gets lots of seats on the board and big share of the new company

    • philyew

      I agree with most of your analysis, except that I think the customer base is important to Softbank. It will take their control to around 30% of the overall market, almost on a par with AT&T.

      What is most important, however, is that they can use that platform to grow their margin to the 40-50% that AT&T and Verizon regularly enjoy. With the amount of debt that they are burdened with running Sprint and the amount they are willing to take on acquiring control of TM, Legere’s target margin of 34-36% is nowhere near high enough. They can’t afford for Uncarrier to force down the earnings of the industry and so Uncarrier has to be stopped.

      • fsured

        Would the DOJ and FCC take the debt burden into consideration when approving take overs? It would be worse if they approve this and the company ends up bankrupt in the US market.

        • philyew

          I think they will absolutely have to consider this as a serious constraint on the ability to operate in a competitive manner.

      • xmiro

        what are the margins for t-mobile? I know Legere likes to trot the “The other guys have 55% margin” which as far as I can see hasn’t been true for a while Verizon is at 50% or 49%

        And isn’t T-mobile’s margin down due to the network modernization? Though they do have tons of customers like me on old plans as well

    • John Masters

      Given the DOJ’s penchant for finding ways around the rules, I’d guess they might just make Sprint divest of Metro PCS (that’s still fairly distinct as a unit), and then be able to claim there is fourth carrier.

  • xmiro

    the NASDAQ has the WSJ without registration nasdaq(.)com/article/us-skeptical-on-sprints-possible-tmobile-deal-20140128-01362

  • Mirad77

    Post att/T-Mobile merger announcement, magenta bleed customers day in day out. I hope they can see what will come of this if announced. As it stand the network of these two needs lots of work to compete with the big two.

    • kalel33

      That wasn’t because of the merger, it was because T-mobile was tanking the customer service on purpose, changing policies that were very un-customer friendly, and trying to gouge every customer with upsells, without giving the customer clear disclosure on what they were agreeing with.

      • Mirad77

        There are customers out there that want nothing to do with either sprint or att. They left post merger announcement, what do you think will happen to those that want nothing to do with sprint? Like those that left sprint for magenta and not on contract with magenta. They’ll stay just for the fun of it?

  • Jaramie Black

    I think if Sprint/Tmobile combine that it would be a good thing. I am a Sprint customer and have had a decent experience. The only thing that kills me about Tmobile is the lack of coverage outside of cities. The entire stretch of 95 from NC to PA is all 2g until you get to Richmond/DC area. If these companies come together, all the spectrum that Sprint has will finally come to use. Tmobile is an excellent company that is changing the wireless industry. Again I think this could be the best possible option for Tmobile/Sprint as long as John and Co take over the operations.

    • FluX

      “I am a Sprint customer…”
      That explains it.

      • Jaramie Black

        I was just saying that I think both companies could benefit from it. I’m sorry the area I live in Tmobile doesnt get service. I mean zero bars, then you drive about 10 miles and its 2g. Sprint has LTE everyone around me so it is my best option. I had tmobile back in 2011, worst experience of my life. I had 2g while my wife had lte with verizon. Combine these companies and i think a lot of good things could come out of it.

        PS: I dont understand why so many tmobile fan boys are such assholes . tmobile is doing great things but 75-80% of the country cant use tmobile so they are far from perfect my friend.

        • macman37

          Here are some options for you: 1) Wait for T-Mobile to expand their coverage with the 700 Mhz Block A spectrum that they just acquired from Verizon Wireless to see how much things have/will change before you continue bad mouthing T-Mobile. 2) Suck it up and fork out the extra money for a Verizon share everything plan since your wife is already with Verizon. It’s $40 per extra line, so add that to the price of how much data you and your wife will share. 3) Stay with crappy ass Sprint whose coverage is spottier than a dog named “Spot” and keep you intermittent moments of joy when you get either voice or data service to yourself.

          T-Mobile doesn’t need Sprint being an anchor to their vast progress they are experiencing!

        • Jaramie Black

          We are both on Sprint. I have been happy with the coverage so far. The only part of PA I didnt have service was an area where my dad didnt get more than a bar of 1x. I am on the student promotion so we literally pay $26 a month for both lines with unlimited everything. I live in Wilmington, Nc now and I get 10-30 mbps everywhere in town. Verizon was solid but I refuse to ever pay what we were paying before. Like I said, we cant beat the price for two nexus 5′s with unlimited everything.

        • KingCobra

          Well consider yourself lucky for living in one of the few areas of good Sprint service. I live in Charlotte and Sprint is the worst of the 4 around here. The only one that doesn’t provide decent LTE speeds.

        • Jaramie Black

          I’ll be out there in a few weeks so I’ll test that out. Ive read on many sites that Charlotte is a tough market to get good speeds which is weird. I had issues with sprint in downtown baltimore which really surprised me. I had 3g in the center of the city, but later discovered I had a defective sim card.

        • OJ

          Both Sprint and Tmo have pathetic coverage. Btw, It’s funny how much Att coverage has improved in such a short time lol.

    • philyew

      How many of TM’s changes will survive, if there are only three companies dominating the industry? Everything TM does is predicated on the acceptance of a lower earnings margin, but no other company is interested in that and they wouldn’t have to be with only three companies each controlling at least 30% of the market.

      Legere’s presence in a new management team wouldn’t guarantee anything, it will be the operating philosophy of the controlling shareholders which determines the nature of the emerging company.

      Believing that a Softbank takeover of TM would work in favor of the consumer is nothing more than wishful thinking, I’m afraid.

      • John Masters

        I have to agree with Phil…this is NOT TMO taking over Sprint, but the other way ’round. Sprint will simply be buying up T-Mobile’s customer base, and we’ll all quickly become Sprint customers…and, there’s not way Softbank’s philosophy would be to accept lower margins to build out a long-term strength. They would have a sizable nut to have to repay. So I’d expect fees and plans to increase rather noticeably.

        • UMA_Fan

          Actually Sprint has lower margins than T-Mobile even though T-Mobile’s plans are cheaper. T-Mobile’s cost structure is completely different. Sprint has tons of bad business decision costs that’s it’s still paying for now. Nextel, iPhone, etc.

          Smartest thing would be to convert sprint users onto the T-Mobile network like they are doing with Metro PCS now. Add Sprint’s LTE bands into future Tmo handsets. Getting manufacturers to support all those bands would be cheaper for a company with 90 million customers. Then refarm their cdma spectrum into yet another LTE band when CDMA is completely decommissioned.

          Even though T-Mobile has slightly less customers than Sprint (for now) it seems that would be the most straight forward path from a technology perspective no matter who takes over whom.
          It won’t make sense to decommission T-Mobile’s gsm. It simply won’t ever happen.

        • philyew

          The EBITDA margin excludes the impact of interest payments on earnings so the fact that Sprint’s margins are lower than TM’s doesn’t reflect how much worse their debt management might be. What it does show is that their operating costs are much higher, counteracting their higher ARPU.

          The bottom line is that Softbank will not be interested in settling for an EBITDA margin less than 40%.

        • xmiro

          who knows, they actually they might settle for EBITDA of less than 40%

          www/./softbank/./jp/en/corp/irinfo/financials/results/segments/mobile/

          Second quarter of 2013 SoftBank mobile in Japan had 35.8% EBITDA margin

        • philyew

          What’s their debt situation in Japan?

          I’m not sure what numbers you were looking at, but their 2013 Q2 earnings report I just looked at showed year-on-year mobile EBITDA margins in excess of 40% since 2009, with the last year’s numbers standing at 53%.

        • xmiro

          that URL I posted shows 35.8% EBITDA margin for 2Q 2013

          can;t find anything about debt i’d imagine it’s a few billion, they bought Vodafone Japan off

  • Nick

    I would want T-Mobile to stay away from Sprint.

    • FluX

      Yes, I completely agree. But you never know what can happen with an amazing CEO.

  • Deceptive Smiles

    TMUS problem is the lack of low lvl spectrum penetrate buildings. I just came from a training and everyone w/ a carrier other than TMUS had service while mine was faint/non-existant. That’s my main gripe. Service in buildings or on the PA Turnpike.

    If TMUS could fix that problem, along w/ their prices and new business model, they could easily become one of the top carriers……Just need DT to either see that or find a buyer that could grow the company better

    • philyew

      They just acquired $3.4 billion dollars worth of low frequency spectrum (700MHz A block) from Verizon to start addressing that problem.

      They have to wait for FCC approval, which will probably take 6 months, and there are issues in some of the markets with channel 51 broadcasters which can’t be resolved until the incentive auction for the 600MHz band is run by the FCC next year, but they will be able to start fixing the problem is some large markets before the end of 2014.

      There simply isn’t another solution available that could move this forward any faster.

  • emcdonald75

    I do not understand why T-Mobile cannot begin refarming their excess 1900Mhz spectrum for LTE and use HSPA+ for voice/data. HSPA+ is capable of voice and data transmissions. Doing this will ensure that their network is ready for Voice over LTE when it is ready. I would try to future proof the network instead of only using AWS for LTE and then changing again later to add PCS and 700MHz A-Block. What Ray Neville is doing is procrastinating and buying time in hopes that T-Mobile is bought. I have high hopes for them but I would push my brand and network to utilize every resource that is available to ensure it is the very best network possible.

    • Zombiexm

      They cant convert all 1900 mhz because the there M2M network is 2g, and the cost to replace all those chips in vending machines would be outrageous.

    • philyew

      That’s really not correct. You’re ingoring the millions of customers who are still dependent on the 2G services delivered on the PCS band.

      • emcdonald75

        Couldn’t they simply give those customers a free upgrade? T-Mobile will be the only carrier to still use 2G technology for the majority of their network in the foreseeable future because of M2M and feature phones. I just do not want to see T-Mobile so far behind in technology. There are so many more A-block licensees to purchase. Will they have the money to purchase more licensees or be able to create roaming agreements to increase data coverage. A-block only helps with data not voice services, yet.

        • philyew

          It doesn’t follow that because some of the spectrum on every tower is assigned to 2G services that it represents the majority of the network capabilities.

          Almost 80% of TM’s native footprint (i.e. not delivered by roaming agreement) delivers at least 3G/HSPA+ capbilities. Over 70% delivers LTE. Most locations offer 10+10 LTE which will cap out 60+mbps while their 20+20 service has tested out at 147mbps peak rate.

          The current planned purchase of A block licenses covers 158 million POPs. That’s half the country, but a much higher percentage of the markets that TM targets to achieve optimum penetration.

          The ambition is to be able to deliver 20+20 LTE to the majority of the top markets, but it needs to be supported by investment that also improves in building service in all those areas. Sub 1GHz spectrum has to be the priority to address that.

    • Chardog

      Refarming of the existing PCS (1900Mhz) spectrum has been being done over the past couple of years… Neville isn’t procrastinating on anything… Why would T-Mo have deployed as much LTE as they have in such a short time if all of this was the case? No logic to your commentary.

    • fsured

      Until till some new super cell radio comes out that is power efficient to work in a cell phone and use any band frequency world wide, none of the companies will turn it off. International travelers have phones that don’t work perfectly with our faster networks but work fine on 2G. They charge a hefty amount for them to roam on the 2G network. It is a source of income.

      I’ve met people from over seas who have top of the line phones and are stuck on At&t 2g because their phones don’t have the proper radios for the US markets. Things could have changed but in a presentation before the At&t take over attempt, the company was explaining their upgrade plans with HSPA+, they pretty much said their 2g will remain as long as international travel here continues to bring revenue. Now T-Mobile might not be as large as At&t or Verizon for international customers, but it still brings in easy money.

  • emcdonald75

    I noticed that AT&T is using 1900MHz PCS (Band 2) for LTE. Why cannot T-Mobile?

    • Zombiexm

      Because that would cause interference?
      Each band is a set of mhz

    • philyew

      It was only in the last year that smartphone users became the majority of the TM customer base. That means there are still a large number of people dependent on their 2G services.

      The network modernization went through three stages: 1) Clear some of the assigned PCS spectrum in preparation to receive 3G/HSPA+ services from the AWS band 2) Move those 3G/HSPA+ services to PCS and 3) Assign the vacated AWS spectrum to LTE. PCS

      Just as TM still have several million customers using feature phones, they also have millions of customers whose smartphones are not LTE enabled. HSPA+ remains a competitive technology which will continue as part of the TM service offering for the foreseeable future.

      If TM is going to invest in more LTE deployment, which it is doing, then they arebetter doing it in sub 1GHz spectrum, which has the advantage of better building penetration and greater coverage range. PCS just doesn’t fit the optimum investment model.

      • xmiro

        from what i’ve read 700Mhz is not so good in populated areas, other than building penetration, because it has capacity constraints something Verizon is experiencing now and is adding AWS LTE.

        PCS and AWS of course require more towers and is not economical for covering rural areas

        • philyew

          Capacity constraints are going to be determined by the amount of spectrum available. What they’ve acquired from Verizon gives them a 5+5 LTE capability, I think, but that is on top of the AWS which in many cases will be 20+20 or at least 10+10. I’m not sure how they will be able to preserve the 700MHz spectrum for use in-building, but I can’t imagine they don’t have a plan.

    • S. Ali

      They can’t afford to deploy more equipment and fiber. That is why they want low-band spectrum because they don’t have to use as many towers.

      Bottom line: Money. T-Mobile is $20B in debt. Nothing short of a bail-out (like Softbank gave Sprint) will change the situation.

      • samsavoy

        Wouldn’t the new 1900 gear spitting out HSPA be capable of LTE? I’d rather them see deploy LTE on 6/700MHz but if they’re using the same radios for both AWS and PCS I’d think they can just turn LTE on over PCS pretty easily, maybe even remotely.

        • vrm

          It appears “access spectrum” has 700 block A spectrum nationwide and wants to sell -

          rcrwireless.com/article/20140129/networks/fcc-authorizes-tdd-use-in-upper-700-mhz-a-block/

        • philyew

          Significantly absent from the list of possible uses is mobile telephony. That is perhaps because it is said to consist of just one megahertz paired (http://ca.finance.yahoo{dot}com/news/fcc-grants-authorization-time-division-170500023.html), which would presumably not provide sufficiently broad spectrum to handle multiple concurrent connections.

      • Jay Holm

        With regards to this debt, don’t you think the 4.4 million new customers in 2013 will help Tmo with the debt, and surely there will be millions more new customers, that has to help with all the debt. Plus Tmo’s stock is up 89% from a year ago.

      • vrm

        How can softbank “bail” tmo wihout incurring even MORE debt, INCLUDING the one tmo currently has ?

        How will it be different ? You are just changing the co name but still have that debt (and in fact more).

        It seems to me that with tmo’s performance in 2013, getting more debt will be easier for them than for sprint/softbank (for buying more spectrum)- the equipment costs for coverage expansion likely will be < $5b- not much compared to all the alternative figures being thrown around.

      • KingCobra

        Softbank buying T-Mobile doesn’t “bail them out” either. They took on massive debt when acquiring Sprint (which still remains). They will take on more debt to finance a purchase of T-Mobile as well as taking on T-Mobile’s current debt. The combined company will be saddled with a ton of debt.

  • Zombiexm

    What I see happening.

    Softbank will buy Tmobile US, then

    Will sell off Sprint to Dish , but soft-bank will gut sprint of its low band spectrum and most likely a good high band. Over-lapping towers will be sold to dish.
    Softbank will either license he Tmobile Brand, or slowly rename it to softbank usa.
    Agreement with dish would host dish’s network at all tmobile towers not sold to dish for x years till dish can build the network up.

    or

    Softbank gets tmobile, has to give up x of high band spectrum.
    Hosts dish’s network @ all sites, sells dish over lapping towers.

    • philyew

      TM has already licensed its towers to be operated by Crown Castle for many years to come, with rights of use assigned back by license. Sprint has already sold most of the towers it owned back in 2008 and licenses them back. It is also already a customer of Crown Castle, often sharing the same towers with TM. Both TM and Sprint have long term licensing agreements with Crown Castle.

      Reassignment of rights to another player, wouldn’t be totally within the control of Softbank because of those contractual commitments.

      Dish would be wise to think long and hard about acquiring infrastructure and operational obligations without a commensurate customer base to support it right from the outset. All of TM’s problems stem from the fact that DT spent $55 billion to acquire Voicestream and PowerTel 12 years ago and only picked up 5.4 million customers to start with. They’ve been chasing that bad investment ever since. It would be a disaster for Dish to do the same…better for them that they made a direct, competitive bid for TM now when the customer base is growing and they are approaching the 50 million mark.

      • Zombiexm

        I was talking about those rights, and the equipment.
        I don’t think dish will go for tmobile, I see them trying a Directv merger anyway.

        I wouldn’t want dish to have control of tmobile neither, and I would change to sprint just for the fact I don’t want to be with a company named “Dish wireless” such a stupid name.

        Also dish isnt really in the market to be a “traditional cell provider” they seem to want to run a wireless internet/ Video service anyway.

        • vrm

          >> wireless internet/ Video service

          this was already tried and had the backing of many industry heavyweights including intel and sprint. It (clearwire) was an abject failure for the simple reason that ALL the spectrum in the world will not help wireless streaming of HD video for more than a few customers at a time. It is just NOT possible with current technology; we will have to wait for star trek times.

        • philyew

          I assume you mean that a dedicated streaming service to the display device is not possible with current technology?

          Netflix continues to grow its streaming service with 2.3 million added subscribers in Q4 2013 to reach 33.4 million in the US.

        • Zombiexm

          Incorrect. Sorry. Clearwire failed because it only had Limited areas, and very high spectrum which made it to costly to build out correctly.
          “not Possible” please tell this to verizon who is playing with it on LTE. It is, thanks come again.

  • bob90210

    For everyone who is concerned with merge to gain spectrum or the upcoming 600MHz license auction, please remember that cellular companies have licenses. And who are the companies licensing the spectrum from? The FCC, i.e., US government, i.e., the American people. That’s right, we the people own the airwaves and license to companies to use on our behalf. It is not for any companies profit but for the people’s benefit. So please write to the FCC and your congressional representative to make sure your interests (not the companies) are considered.

  • uknoTJ

    Sprint just spent how much money to “upgrade” their network? and now that debt falls in not only theirs but also Softbank’s hands now. T-Mobile also just spent money upgrading their network as well which also costs money. So if a merger happens (which I hope it doesn’t) which side will have just thrown away money that was essentially wasted on upgrades to a network that will have to be again upgraded to work on a different set of frequencies? that loser will be Sprint because I don’t see CDMA beating out GSM as the primary network tech under the new merged company. and keeping the networks seperate will be another Sprint/Nextel. SoftBank should quit while they are ahead before 1.) taking out financing to purchase a company they can’t afford & 2.) having a headache trying to combine, shutdown, & refarm 2 completely different networks which will result in operating losses and their needing additional financing to even execute a network shutdown & refarm

    • samsavoy

      Sprint might have an execution problem delivering speeds but they were still able to get LTE gear and backhaul at suburan and somewhat rural sites that T-Mobile hasn’t touched (yet). Fiber is fiber is fiber – if the combined company can utilize what Sprint already brought in, I don’t think it will be as big a deal as people think.

    • vrm

      they realized they bought a lemon (sprint) and cannot return it so they are doing the best they can- add some sugar (tmo) and make lemonade !

  • charlieboy808

    SoftBank should just quit while it’s ahead and just focus on it’s own brand. I see a huge loss if they make an attempt at this purchase. The DOJ has already said no once and they probably will just say no again. DT should not take offers like this it doesn’t help the brand at all. I understand that they want to sell of T-Mobile USA but they should think before they just take the highest bidder. Unless they just want to continue to hold on to it after each failed attempt to sell.

  • Nick

    “Whatever the advantages or disadvantages there ar,”

    Is it talk like a pirate day?

  • M&AKing

    Everybody is focused on the DOJ’s 2011 view of the US telecom market, they wanted 4 carriers back then. Now we are in 2014 and I wonder if they are of the view, look at the American Airlines merger that was approved, 3 years ago it was considered the unthinkable. I see this deal going through, to many banks want in on the action.

    • philyew

      Look at the DoJ submission in support of their 2011 action. You could replace AT&T with Softbank/Sprint throughout and resubmit it almost without further changes. The arguments have even strengthened in light of TM’s pro-competition impact on the market in the last year. They are already flagging their concerns and nothing has been announced formally yet.

      There was also the small matter of a chapter 11 bankruptcy filing for American Airlines’ parent company prior to the merger going through. Somewhat different scenario.

      • http://twitter.com/tabascotx Mike Roberson

        The AA merger was approved because individually the two airlines were in a seriously bad financial position. Without the merger we could’ve actually lost both to bankruptcy and insolvency. But that does bear another question. If this is such a good idea for T-Mobile, why isn’t T-Mobile making the offer to buy Sprint? The fact is that this could end up destroying TMo like Nextel did Sprint.

        • philyew

          Certainly, the circumstances relating to AA can in no way be used to justify a change of heart by the federal authorities regarding market concentration in the mobile wireless industry.

          Since DT remain the majority shareholder, it would be up to them to orchestrate funding for further acquisitions. I think it’s clear that they aren’t interested in increasing their debt situation in the US market. Even acquiring a well funded entity would extend their debt unacceptably, so imagine the burden involved in acquiring a company like Sprint with its debt load. Really I can’t see anything about DT trying to acquire Sprint which wouldn’t scare DT investors to death…

  • http://twitter.com/tabascotx Mike Roberson

    In the words of Daniel Bryan… Yes! Yes! Yes!…. A Tmo Sprint merger would destroy both. Sprint would be the weight around Tmo’s neck just like the Nextel Merger for Sprint. Sprint is a nightmare,ask any Sprint Corporate Store employee.

  • vinnyjr

    Sprint is pathetic, haven’t been able to do anything to better their network with plenty of money and bandwidth. T-Mobile has been able to increase their footprint, data speed and service. T-Mobile PLEASE stay away from Sprint. They R nothing but trouble.

    • RedGeminiPA

      Sprint has LTE where I live. Meanwhile, T-Mobile is still EDGE for as far as the eye can see. Even Sprint’s 3G is worlds better than EDGE, at least everywhere I’ve used it.

      According to Sprint’s network map, all towers in my area have seen upgrades twice in the last 6 months. That makes for a total of 22 network upgrades in my area. https://network.sprint.com/search/16601/ Meanwhile, over at T-Mobile… “crickets”… Altoona, PA was one of Sprint’s second batch LTE deployment cities.

      I got tired of waiting for T-Mobile to bring my area, the largest city between Pittsburgh and Harrisburg, up to speed, so I finally went with Sprint. The experience, so far, is fine. Yes, I had slightly better coverage when traveling with AT&T, but for the price, Sprint’s new Framily plan makes it very attractive, especially once I get at least 7 people in my group.

      If/when T-Mobile finally starts pushing areas that aren’t major cities for network upgrades, I’ll think about it. Until then, I’ll use Sprint.

      • Jaramie Black

        I completely agree man. I am from Southern york county(Stewartstown, Delta) and its straight edge. While on sprint I was pulling 30+ mbps on lte in the house. 3g was decent while I was up that way for the holidays too.

      • Jay Holm

        Everyones experience differs where they live. He’s being honest.

  • http://twitter.com/tabascotx Mike Roberson

    All I can say, And I cant believe id EVER say anything like this in my life, thank God the FCC is seriously looking at the wireless industry. Hold on while I sit down for a sec… They stopped a deal with Att that would’ve have destroyed TMo. One that was bad for the consumer. I just hope the FCC seriously looks at this deal too. If the Att deal was bad,the Sprint deal could be a disaster.

  • master94

    How about they spend that $31 billion dollars on upgrades instead of attempting a merger that will never be approved.

  • Binny Gupta

    Where is dish or Google during this?