Does T-Mobile really “need” a Sprint merger to be competitive?

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Image Credit: CNN

The dust has settled, and we’ve started a new week. But don’t let that fool you in to thinking that T-Mobile and Sprint’s rumored merger won’t be mentioned. Predictably, after the earnings call and Q1 results were announced, analysts jumped on the news with their view on what the carrier’s doing right, what it’s doing wrong and what it needs for future success.

One such analyst is well-respected Walter Piecyk who reports on T-Mobile’s return to revenue growth for the first time in two years. As we published a couple of months back, it was clear that – at some point soon – T-Mobile would shift from dropping revenue to growing again, and it’s delivered. Magenta’s 2.4 million new subscribers, helped onboard by the ETF payment program, has boosted T-Mo’s revenue, although it still lost around $150 million last quarter. Revenue is up, but profits aren’t quite catching up. Piecyk – however – sees this loss as a good thing:

“Telecom is a scale business,” Piecyk told International Business Times. “You want as much revenue for your fixed costs as possible, so it’s very important to grow revenue.”

But, in this market, it’s not all about revenue and profits. It’s also got to be about market share. Logic would state that you can’t really have one without the other. The higher the percentage of the available market you have, the more money you’re going to make. And Verizon – despite having a poorer quarter in terms of additions – still grew its market share in what was T-Mobile’s best ever quarter.

And his analysis doesn’t really get any cheerier from there. Verizon’s CEO, Lowell McAdam believes the ETF scheme doesn’t buy loyalty, and that those Verizon customers who did switch over to T-Mobile will eventually switch back for its coverage. A point with which Piecyk agrees.

“With the growth of wireless data usage … it’s going to be increasingly difficult for Sprint and T-Mobile to individually be competitive with companies that can spend more than both of them combined on their network.”

At any moment, either of the big two companies could percievably become just as competitive as T-Mobile in terms of pricing. They both have large enough subscriber bases, with large enough revenue streams to compete with T-Mo “…if they elected to…”

So what’s the answer? How can T-Mobile continue to compete effectively, start making profit and keep its customers loyal? Apparently, a T-Mobile/Sprint combo.

“Competition is not always about the lower price, its also about building a better network,” Piecyk said. Since T-Mobile and Sprint pay competitors to access their wireless networks, it increases both companies’ costs. By combining their spectrum and revenues, the two “would have an opportunity to build networks that have faster speeds than existing operators … and the capacity to handle it.”

Does he have a case? Undoubtedly. If T-Mobile could keep its brand, merging with Sprint would more than double its subscriber base and put it on even terms with Verizon and AT&T in the market share war. And, with the spectrum and infrastructure in place, it could give its network a boost too. It would be a short-term, and immediately visible improvement.

I think the worry here for T-Mobile fans is that the merger somehow, magically gets over all the regulatory, and then the Magenta brand disappears. And everything good just disappears.

Truth is though, that there are huge regulatory hurdles. No matter how much Masayoshi Son, SoftBank’s CEO, wants the deal to go through, the FCC and DoJ are clearly not in favor. And here’s the other kicker: If T-Mobile continues on its path, it will still be successful. It’s just returned to revenue growth, it’s got new A-block spectrum available to improve its coverage reliability, it’s re-farming MetroPCS’ CDMA network and using its spectrum to boost its LTE. What’s more, there’s a major spectrum auction upcoming, giving T-Mo a chance to improve even more.

If it continues the trend it’s on, T-Mobile will eventually overtake Sprint as the #3 carrier. And let’s not forget, Sprint’s not the only other carrier in the States T-Mo could merge with. We’ve seen a trend in recent years for larger carriers to merge with regional/prepaid ones. T-Mobile did it with MetroPCS just 12 months ago, and it’s reaping its rewards now.

More importantly, as far as T-Mo goes, it doesn’t “need” a merger with Sprint. It might need one to immediately compete with the two big guys. But it doesn’t need one to be a great carrier. As long as it keeps making the moves it’s making, adding subscribers, increasing revenue and boosting coverage, the only way is up, surely?

What do you guys think? Would you like a merger if it meant T-Mo was right up there with the two big guys, or would rather keep the identity and network as it is and just focussing on overtaking Sprint?

News via: IBT

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  • NOYB

    Easy answer. No!

    • Cam Bunton

      Hehe. Care to unpack that? ;-)

      • NOYB

        Does T-Mobile really “need” a Sprint merger to be competitive? Easy answer. No! T-mobile can do an dis doing well enough by itself.

        • NOYB

          *and is doing well

        • Paul

          To elaborate, there are 2 things that Sprint has to offer Magenta:
          – Spectrum
          – Customers
          Magenta is gaining customers as it is, and is on the up. Sprint is losing customers and gaining very few, all while trying to stay afloat.

          Does T-Mobile “need” Sprint? No.
          I have to agree.

        • vrm

          well, they can sell the 800 mhz to tmobile for cash, if they REALLY want to offer that.

          As for customers, they are already offering them, every quarter !

      • Roger Sales

        I don’t understand why Sprint is fighting so hard for a T-Mobile merger when someone should be making a play for US Cellular. They have the rural coverage that both companies need to attract longterm customers who want dense LTE POPs

        • Willie D

          Not only that but USCC has AWS and 700Mhz A-Block that compliments TMobile but not Sprint.

  • Paul Garrison

    Even analyst can be bought.

  • Verizonthunder

    No T-Mobile is far more reliable than Sprint. Have people forgot Sprint major f*** ups Sprint/Nextel merger, botched wimax rollout, and lightsquare joined venture before failing to gain clearance for changing to LTE which did not.

  • vrm

    No, sprint needs t-mobile to be relevant.

    FCC has already shown its willingness to get t-mobile some low band spectrum and that was the last missing tool in its competitive chest.

    Co. is organically growing and the growth should be sustainable as it builds out its network. After the n/w upgrades from EDGE, it is in much better shape than sprint as far as conventional services go.

    Being a public co., they should be able to raise capital on their own and incur much less debt than if they teamed up with sprint.

  • itguy08

    Nope.

    Now that they are getting the 2G areas up to decent speeds that pain point is slowly diminishing. They already had a decent voice network it was/is the data that can stink on the outskirts.

    T-Mobile also needs to work on getting their coverage gaps filled in. They are doing things right and now that users are increasing, they should have no issues pouring money back into the network to fill in the gaps. Be it more 1900 towers, 700 Mhz, or 600 Mhz or buying a legacy 850 Mhz carrier. If they can do that and increase their reach they would be unstoppable.

  • Garblicks

    Spectrum is the name of the game. Let tmobile get enough to cover this nation coast to coast and enough customers will bolt the big two and cause a real price war. They it it coming that’s why they are protesting the new purposed spectrum rules

    • Deadeye37

      Agreed. When it comes down to it, keeping customers means that the network coverage & quality needs to be on par with AT&T & Verizon. Tmo’s move to upgrade EDGE to LTE is a good step in that direction and will help with a lot of people livingi n suberbia. However, Tmo’s coverage for rural areas and major highways between cities is lacking. If we can expand that way and keep the QUALITY of calls good and the SPEED of LTE better than AT&T & Verizon, then we could eventually become #1.

  • JosephLagalla

    New quarter means another chance to see an uncarrier move. Hopefully we’ll glean some information on the progress of the EDGE refarming and LTE expansion then. Biggest complaint is about coverage. Fix that and watch ATT and Verizon dance.

  • Chris

    NO!!! Gtfo Sprint

  • mobileguy

    Both carriers face the same issue: lack of coverage (mostly data) outside major metro areas. Putting those 2 together wouldn’t solve that. Unlike Sprint, T-Mobile is doing something about it. The question is if reframing their 2g network and adding the 700 spectrum is enough… I think its gonna take a lot more than that unfortunately.

    • Garblicks

      That’s something the spectrum auction next yr can solve. Not 100% but at least 75%. Then it’s just making sure the network overlap

      • mobileguy

        Let’s just hope they get enough to really compete with VZ and At&t

    • Willie D

      Just like Sprint has PCS spectrum they won’t deploy 4G on, only a sliver G-Block of it, TMobile is more than willing to deploy LTE on all spectrum bands.

  • S. Ali

    In the near term (2-4 years) no, T-Mobile can upgrade its native network to LTE and get low-band spectrum to ensure strong competition. However, in the long-term (5-8 years) absolutely, there is no more spectrum left, and Sprint sits atop a mountain capacity waiting to be used. At peak, T-Mobile won’t be able to provides speeds beyond 150mbit while the other carriers can go beyond that limit. There are other advantages to a combined company outside of capacity. More customers means bidding on cheaper devices, lower network cost, lower overhead, cheaper equipment, better cost distribution, and more growth opportunities.

    I’d like to see T-Mobile go after US Celluar, C-Spire, and nTelos. Grow organically because T-Mobile’s underdog status creates loyalty (it does for me).

    • Maximus

      Your theory about more bidding power doesn’t hold true. If it were, VZW and ATT would have the lowest prices. That is clearly not the case. Even if they did have more bidding power, the savings would not get passed on to consumers. They would just pocket more. And how much faster do you really think speeds need to get? You can’t get much faster than instantly…

      • S. Ali

        VZW and ATT buy their phones in bulk, they aren’t paying $650 a phone. Then may pay $450-550 for orders of 5-10M+. It isn’t about passing the savings on to the consumer, its about reducing operational cost. Same with equipment. The more panels and cabinets you order, the cheaper the rate. Softbank bought Sprint because they both use TDD LTE in the 2.5ghz range and China is doing the same. Same for customer acquisition cost, which is around $250-300, that drops as you increase your sales volume. Speeds are already getting faster. You’re seeing 30-50mbit on T-Mobile, Verizon and ATT are reaching 60-80mbit, by the end of the year, we will be running at 100mbit in most markets. Scale is incredibly important for the future.

        • vrm

          t-mobile has been selling flagship phones for 399-499 for years now. If you order a million phones, you will get the wholesale price, I am sure. At some point, the price advantage will drop because the manufacturer stands to lose more money for every dollar they discount.

        • philyew

          In 2011/12 TM paid Samsung an average of $448 per unit for the GS2, which they sold for around $530, if I recall correctly. At the same time, AT&T were paying an average of $437 for their version. Both bought around 1.2 million units. (Source Samsung income statement in Apple lawsuit).

          Since then MSRP has continued to drift upwards, so I have to believe the wholesale price has also continued to drift upwards.

    • vrm

      govt is freeing up more high frequency spectrum. It is even adding to the white space. If a business booms around the white space and hotspot 2.0, sprint’s investment in clearwire would become redundant.

  • Jefferson Josue Morales

    It’s crazy how big tmo got with the new ceo. I wonder what telecom ceo is thinking right now. He pretty much gave up on us. We all thought tmo was going to tank but look at us now =)

    • tmoby

      Yes, look at us now. Losing $150 million is great. Not. How can we add 2.4 million and still lose money? We need $. Sprint has that.

      • pbxtech

        Borrowed $$ – you mean!

        No thanks.

      • Tyler Kirchman

        They lost money from all of their advertising and paying ETFs

      • Maximus

        It costs a carrier money to add customers up front, hence the $150 million loss. However, the loss will turn into a gain over a period of time. The up front loss is not a negative sign.

  • DirkDigg1er

    . I agree with the article. Lowell McAdam is right about return customers.

  • dm33

    Agreed.
    The fear is that if TMobile merges with Sprint, the uncarrier, the small scrappy competitor trying to eat the big guys lunch, will disappear to be replaced with just another big carrier. I much prefer to root for the disruptive underdog providing great service, lowering prices, and at the risk of sounding like a tmobile sound bite, removing pain points.

  • steveb944

    “They both have large enough subscriber bases, with large enough revenue streams to compete with T-Mo “…if they elected to…” ”

    The thing is I don’t think that Verizon and AT&T will be dropping prices as much because that will be missed profits, especially as T-Mobile takes their customers in strides.

    T-Mobile doesn’t need a merger with Sprint. T-Mobile can buy out Sprint in a couple years when they’re on their way to 2nd leaving Sprint in the dust.

  • Tina

    Why is this being brought up? Did you read the latest article from phonescoop. Com,? Fcc limiting sprint because of their holdings in 2.5 ghz spectrum, if they lump it with their other spectrum holdings they own too much. Which as it said in an article about 2 weeks ago, could preclude them from kerning with any other mobile carrier. According to today’s article, Sprint is fighting that ruling. I was wondering why this news is even being brought up?

    • philyew

      There’s plenty of media and analyst discussion on the topic, largely as a result of TM’s Q1 earnings statement last week. The discussion here simply reflects that interest.

      Certainly, some of it had been promoted by Sprint’s shills who are always activated whenever TM has some good news to report.

  • Adrayven

    With all the new spectrum coming, I think T-mobile will be fine.. yes, they won’t have instant spectrum / tower / customers.. but instant gratification is overrated.. As long as they stay the path, they will eventually easily surpass Sprint..

    Irony is, I don’t see ATT/Verizon changing plans to truly complete on price point.. they could, as you’re article states, but unlikely.. they are driven by their stockholders..

    There are a whole host of issues with Sprint; including massive debt hanging around their neck right now.. T-Mobile may not have the numbers, but they don’t have the noose around their neck either.. Sprint is slow to respond to network upgrades.. T-Mobile would have to completely gut Sprint… drop Sprints ‘Vision Network’, keep John, and move Sprint customers over while using their spectrum..

    Add to the fact that Sprint doesn’t have a lot of low frequency spectrum(600-700MHz).. which is what T-Mobile NEEDS.. they don’t need more high frequency(2400-2500MHz) … which is almost all Sprint has exclusively… except for the Nextel iDEN network.. but thats small… 5×5 in most areas, some 10×10..

    Just not worth the headache..

    I say let them battle it out.. then the victor can pick from the remains of the fallen. ;)

  • Rick Rudge

    You’re not fishing for posts, are you Cam? ;-) The saying, “Bigger is not necessarily better.” comes to mind. I know that’s not true of business, or of phone carriers, but it does explain why there are so many loyal T-Mobile customers. Also, isn’t part of that loss because T-Mo is buying-up more bandwidth?

    • Cam Bunton

      Haha… no. Not fishing. Just a discussion-worthy topic I wanted to put out there. Clearly lots of you have well thought-out beliefs on the subject, and with all the Sprint/T-Mo talk going on again recently, it seemed good timing.

  • francob911 .

    Why need Sprint, were going to be #3 by the end of this year anyways

  • JaswinderSinghJammu

    Only reason I see for the merger or some kind of deal would be combine the spectrum, Soft Bank money and let John Legere run the company other than that there is really no reason

  • Nick Gonzalez

    I don’t want a merger with Sprint simply because of all the excess baggage Sprint is carrying. Maybe down the road after a year or 2 when magenta has long overtaken Sprint for #3, maybe then Tmo could just buy Sprint and their network or something. We got too much momentum right now.

  • Fred.d

    Blaah they’ll be #3 soon ? Yup then what ?! It’ll be years before they catch up too either Verizon or AT&T , Sprint & T-Mobile should merge for the following reasons ! 1.A OWNER WHO will be COMMITED 2.LARGER CUSTOMER BASE 3. WAY BETTER COVERAGE ! They should get rid of the Sprint name , keep T-Mobile uncarrier everything && uncarrier CEO & STAFF. I think most people don’t want it to happen is because the my feel it’s gonna be run the Sprint way.

    • Fred.d

      They*

    • Mike Palomba

      It true. The sprint CEO has agreed to resign if the deal goes through and the t-mobile CEO will take over

  • gina323

    can anyone help me i just came back from mexico city and used my phone now im afraid ill get a huge bill! i go every year and would always roam on “”movistar” but this time on my xperia z1s i went to network settings and chose telcel and used it it worked fine , but i stayed on it since it worked much better than movistar i got signal deep in malls were movistar didnt and data also worked but since this the first time using telcel will they charge more than using movistar? before i left i paid 10 bucks more for it could work internationally and the gurl at the tmobile store said tmobile roams on movistar only in mexico she didnt say anything about telcel so now im really sh**ing it when my bill comes! because i used a lot of data on telcel does anyone know if its the same roaming on telcel mexico like it is on movistar?

    • randomnerd_number38

      This post wound up much longer than I wanted, so here’s the short answer: you don’t need to worry about extra charges. Read on for my longer answer.

      If you are able to connect to a network and use its services with your t-mobile SIM in the phone, that means T-Mobile has a roaming agreement with them. There are no networks that you can connect to that will cost more than others while roaming internationally.

      If you’re on a Simple Choice plan (or other “new” plan that was released after March 2013), you have unlimited text and data while in Mexico and over 100 other countries, regardless of which network you connect you while in those countries. All your calls are 20 cents per minute while in those countries.

      You don’t need to pay 10 bucks more per month for these features. The rep may have added on “stateside” discounted calls and texts, which gives you better rates(or maybe unlimited minutes, I don’t feel like looking it up right now) for calling from the US to other countries, but does NOT affect your rates while roaming internationally. Unless you make a lot of calls to Mexico or other countries while in the US, remove that feature.

  • dontsh00tmesanta

    Seems like sprint needs it more

  • stl user

    deutsche telekom has been trying to sell t-mobile for years. they want to exit the us market. its not about becoming more competitive

    • philyew

      It is about becoming more competitive, regardless of Deutsche Telekom’s long term intentions, because they know that the only buyers interested at the moment will not gain regulatory approval.

      They therefore need TMUS to be in a much better position competitively in order to attract another buyer who will meet with federal approval.

    • Maximus

      They’ve been wanting to get rid of them for years because they sucked for years. Now that they are on an upward trajectory, their minds may have changed.

    • fsured

      DT does want out of the US market but the major push previously was from the prior CEO of DT. I can’t remember the new CEOs name but he has taken a more cautious view to the issue instead of selling the company to the first offer. He is seeing the change in the company and how it is growing to be a positive asset for DT when their other endeavors are not doing well. He has stated a willingness to let the company float longer and see what happens. A desire to wait for the right buyer and the right time. That is a major change from the previous head of DT. But yes, eventually DT will sell or partner with some company over the US branch.

  • Maximus

    I think the merger would be unwise. If the trick is gaining loyalty, a merger with Sprint would not help in that department. I believe their current strategy of introducing consumer-friendly policies and rapid improvement to its network over time will build that loyalty carriers are looking for. There is no rush to be on par with VZW and ATT. And if TMOs continued growth causes VZW and ATT to all of a sudden make their prices competitive with TMO, then everyone has won.

  • UMA_Fan

    The thing is when you have 100 mil + subscribers its NOT as easy to lower prices which is a key point all these analysts are missing. If your current subs switch to your currently offered cheaper plans that’s 100 million a month in losses at the very least

  • philyew

    From an operational point of view, it is very likely that a merged organization would be more efficient, cost-effective, and capable of delivering a sold nationwide network performance…eventually. If you’re an investor, with no other considerations, you would probably be justified in feeling that this merger should be allowed to go ahead.

    If, however, you are “only” a consumer, you would be wise to think very carefully before giving this your backing.

    There’s a view that even from a consumer perspective, everything will be fine as long as John Legere is in charge of the new organization. People seem to think that his free-and-easy style is a permanent antithesis to the “carrier” behaviors that have been pissing off customers in rapidly increasing numbers over recent years. Reality may be somewhat different.

    It’s pretty easy for a company which has barely been making double-digit margin to point the finger at their competitors making 40-50% margins and accuse them of excessive profiteering. TM have said that they would settle for margins in the mid 30s. That would be a huge improvement from an investor perspective, so it’s a creditable target.

    But what happens, if you transform the company, by merger, to a scale much more comparable with the market leaders? What happens if those market leaders are still pulling down obscenely high margins? Investor expectations look at the current 30-35% margin and realistically expect that the 40-50% enjoyed by AT&T and Verizon is now attainable by the merged Softbank carrier. At that point, forget Uncarrier, forget all the initiatives that grow revenue, but reduce profit. It’s all about profit and that means carrier, Carrier and more Carrier behavior.

    Maybe the reality is that Uncarrier has a limited lifespan regardless of how the market develops, but it has a better chance of lasting while TM and Sprint are kept apart.

  • Cruz R.

    Sounds to me like this well-respected analyst Walter Piecyk. Was bought by Sprint. I’m just saying…

  • fsured

    I don’t think Sprint will be the answer and not because of their network
    or change of T-Mobile to be more like a giant legacy carrier again. It
    will be the regulation hurdles and DT needs to be smart about this. DT will need and want a hefty
    insurance in case the deal goes south. Sprint may come out looking
    great in it’s attempt to buy T-Mobile. It will be a great boon to
    Sprints customers since they could jump on to a working network fairly soon. It would suck for T-Mobile customers as the service we have now will go down as it takes on the weight of the inept Sprint network. We
    should remember what happened to T-Mobile when At&t attempted this.
    The company turned to rubbish with lack of investment, job loss, customer loss, etc.. Can the company come back a second
    time from this and would customers want to come back?

    Is Sprint to stop spending money on network improvements or
    T-Mobile? One of these networks will be shut down but they can say
    things will continue as is for network expansion but really, that’s
    money down the drain that neither company can just toss. Why keep
    investing in the one that is expected be cut off? I’m sure the government will want to know of this plan as part of the submission. If they keep T-Mobile then
    it’s admitting their network is crap and Spark wasn’t going to succeed.
    If they keep Sprints network then it is wasted money for T-Mobile to
    continue building it’s network if it will just be turned off. Talk
    about an instant flood of customers to Verizon or At&t as none of us
    want to be a part of Sprints infrastructure.

    • Jonathan Gonzales

      You don’t just shut off, or toss aside a full functional national network. The value in the network and towers is GARGANTUAN. Whatever network they decide to not use would be sold to another upstart carrier like Dish Network or Google, and the past investments made to either network would be recouped in such sale. Its not money down the drain for either.

      • Jerry T

        Do we forget the Nextel Sprint Merger in 2005?. FCC and DOJ has not. Sprint said they needed Nextel to make a better network. For 8 years Sprint ran 2 Networks and did nothing to expand there customer experience. But with our tax codes for cooperate America is more profitable to abandon infrastructure. thx.

  • jdubb

    “What do you guys think? Would you like a merger if it meant T-Mo was right up there with the two big guys, or would rather keep the identity and network as it is and just focussing on overtaking Sprint?”

    To answer this question honestly, I’m not opposed to a merger, but I don’t think it should be a merger between 2 of the 4 BIG carriers. There are so many other smaller companies in this country that can be scooped up by the leading four. I agree 100% with the DoJ and the FCC that there is a NEED for the presence of four carriers in this country. The odds of better competition is better with 4 versus 3, I don’t think anyone would disagree with that…having just said that, I do think that coverage is a pain point that Sprint and T-Mobile need to address and from the looks of it, T-Mobile has already implemented a plan to have its entire 2G network to LTE by the end of 2015. Why can’t Sprint take a stance similar to T-Mobile, spend money on a network build out instead of trying to purchase a company that the government had already told you they would not likely consider, let alone approve.

    The issue isn’t competing with the big guys, it’s offering consumers something that they can benefit from, save them money and make them feel like they matter instead of being another phone number in a system. The thought of losing what T-Mobile has worked so hard to create to a company with a reputation as tarnished as Sprint’s is one that most all of T-Mobile subscriber base would rather not even have in the first place.

    An improvement to coverage is definitely a great thing for T-Mo customers, but a merger is NOT the only way too accomplish this, it looks as if the spectrum auctions are going to be related to give carriers other than AT&T and Verizon a fair chance at acquiring much needed spectrum, and when you look at AT&T and Verizon responses to that regulation it is pretty promising for T-Mobile.

    One more time, WE DON’T WANT OR NEED A SPRINT MERGER!

    • Bryce

      One correction, Sprint hasn’t said anything about “converting all 2G to LTE” because it’s been part of Network Vision all along. From day one Sprint planned on building out LTE to its entire footprint and so far that’s been the case. The number of 1x only cities/towns left on Sprint is in the single digits.

      Nearly every city has been upgraded to at least EVDO. Throughout this year, they will be converting those sites to LTE.

  • monkeybutts

    They don’t need sprint, they need sprint’s spectrum to boost their coverage. The 700 A block isn’t going to be available in a lot of states.

  • notyourbusiness

    I think all the big changes that T-Mobile has made over the past year and so are proof that they don’t need a merger with Sprint to be competitive. Look at how quickly ATT made changes afterward with Next and all that jazz. Ditto for even the “mighty” Verizon a bit later. The other carriers are clearly intimidated and are making these changes to keep up with T-Mobile. Merging with Sprint would probably have the exact opposite effect because what’s to say Mayashi Son would keep things like they are now if that merger were to go through?

  • FluX

    No.

  • chriss Whites

    Sprint is in fiasco at this given time. Their future is uncertain due to low liquid assets and large expulsion of postpaid customers to Tmobile. It is very obvious to eliminate a major threat for any big company, thus these large companies love to swallow small fishes to keep them in business. For instance, Sprint bought Nextel and completely dissolved the company to become Sprint. At that time, Nextel was the 5th largest carrier and Sprint simply eliminated the competition. They had two different networks and Annalists predicted the kayos both company will be in. Sprint is trying to eliminate the biggest threat for them. In fact, it is just matter of time when Tmobile will become the third largest carrier in the nation. It will indeed take years for Sprint to enhance their retrograde network and by the time they will complete the network to the competition, there will be 5th generation network already been deployed by other carriers. They need efficient spectrum for LTE which they apparently dont have. By combining three frequencies don’t really solve the problem. None of the frequencies are designed to have a deeper penetration. Their Network Coverage map is the most deceptive map i have encounter since the inception of cell phone network. This merger is nothing besides to eliminate a biggest threat for them to stay the thirst largest carrier.

    • FluX

      What I though too! Their “network vision” is truly a vision, not a plan for reality.

  • Alex Zapata

    The answer is…..no.

  • Net Workdood

    Sprint is a mess…t mobile…stay the course and build up your network and THEY will come…

  • Singleweird

    t-mobile added 2.4 million customers without sprint, which will be 1, maybe 2 hundred million in revenue next quarter. when churn to t-mobile settles and were not paying out thousands to each new customer, our balance sheet will have some swag of its own. we need sprint like a hole in the head.

  • Willie D

    Sprint does not need TMobile. Not only do they have more spectrum to build a network, their actual licences and coverage are larger anyway. They simply want to take out a driving force. They “combined” with Nextel to be stronger, remember the merger of equals and “Together with Nextel” bullshit they fed everyone ..and it didn’t work. Same story here.

    • Nathaniel Ily Jacob-Joshua Hud

      Rather tmobile doesn’t need Sprint.

  • vinnyjr

    Sprint needs T-Mobile bad, T-Mobile doesn’t need Sprint and it’s decrepit CDMA Network. It is slower than EDGE and still drops calls all day long. Their data speed is non exhistant and are loosing customers hand over fist. T-Mobile has a super fast HSPA+ Network and their LTE Network is even faster. They are currently installing 4×2 MIMO LTE Network. (Multiple input – Multiple output) All the other Carriers are still installing and upgrading to the 2×2 Network. T-Mobile this time next year will have the country fully installed with their 4×2 super fast modern Network. Thank You T-Mobile.

  • Joe Block

    hmm..i don’t understand why people don’t realize the potential of a sprint/t-mobile merger….okay, i get it, sprints network, management etc. hypothetically speaking, t-mobile’s momentum does push itself to third place, then what? sprint is out of the picture..do you honestly think it has a chance against att, or verizon? the resources and subscriber base they have will take years for t-mobile to even come close. lets put it this way, i used to work for magenta..keep the t-mobile image, values, heck even legere as ceo and convert all of sprint’s network to lte gsm compatible..win-win situation.

    • David Thoren

      THIS situation would be fine. The problem stems from the way the merger is presented: Sprint buys TMUS. In that case, people feel that it means TMUS ends, Spring continues as a CDMA network with the corporate culture that has made it such a huge success /s.
      When I started to hear whispers that Legere might be the head of the new TMUS / Sprint.. then I started to look at it differently. But I still don’t think we would end up with everything we would want from the deal.
      Basically, yeah, I agree with you, I’m just cynical.

    • David Thoren

      THIS situation would be fine. The problem stems from the way the merger is presented: Sprint buys TMUS. In that case, people feel that it means TMUS ends, Spring continues as a CDMA network with the corporate culture that has made it such a huge success /s.
      When I started to hear whispers that Legere might be the head of the new TMUS / Sprint.. then I started to look at it differently. But I still don’t think we would end up with everything we would want from the deal.
      Basically, yeah, I agree with you, I’m just cynical.

    • philyew

      At its best, the potential of such a relationship would be another network on the scale and capability of Verizon….but if that’s what everyone wanted then they would already be Verizon customers.

      The question everyone has to ask themselves is whether it is really likely that we will see a network of that nature delivered at current TM prices, and with the kind of behaviors that TM has developed for its Uncarrier role as the underdog?

      What is the normal outcome of a market concentrating to the point there are only three significant players? Is it more likely that all three market leaders will continue to enjoy the 40-50% profit margins pulled down by AT&T and Verizon? Or will they all suddenly decide to settle for the more modest targets that TM has set for itself while struggling out of a distant fourth position?

      There has been over a century of anti-trust legislation in place because the nature of the market continues to justify consumer and regulatory fears that highly concentrated markets inevitably abuse their customers.

  • randian

    Going the other way, Sprint’s 2.5 GHz holdings are awesome. Tons of spectrum, and if built to sufficient density (far from that now) for good penetration offers ungodly bandwidth.

    • turtle6988

      2.5 GHz spectrum has poor penetration, you would have to build a ton of sites to get decent coverage. That’s why low band spectrum is in such high demand. Can’t wait for T-Mobile to start building 700 LTE and 1900 LTE.

      • Bryce

        That’s true, but not entirely. Sprint has been converting WiMax sites to Spark with 4T4R radios which toprovode better indoor penetration than WoMack ever did. Sites that are having Spark added on (Sprint NV Sites) are getting 8T8R. 8T8R radios give the 2.5GHz spectrum the same propagation characteristics of PCS.

        Additionally Sprint is not only adding thousands more macro sites but they will be deploying small cells later this year for even greater coverage on 2.5GHz.

    • turtle6988

      2.5 GHz spectrum has poor penetration, you would have to build a ton of sites to get decent coverage. That’s why low band spectrum is in such high demand. Can’t wait for T-Mobile to start building 700 LTE and 1900 LTE.

  • Zombiexm

    I’d like to point this out..

    I’ve read a couple articles on this rumor which all suggest that DT would be a partial owner in the new combined company.

    Example “On any specific deal that may or may not be going on, I really have no comment. But as a telecom professional who’s been at this game a long time, could I wake up tomorrow and use the access and capabilities of those two companies — and the economic prowess of the two owners — to create something really different and sustainable in the U.S. wireless industry? I sure as hell could.”

    If the rummors are true, and DT is a part owner in the new company, and the branding is kept I could see it actually being for the well good. Just wondering tho, how much of the new company would they be able to own? Currently Softbank only owns what around 70-80% of the company, tmobile owns 74% of tmobile..

    If we say softbank buys 74% from tmobile, with cash and new stock in the new company.. I’d see them only owning around 30%, Softbank around 50 , and 20% wallstreet.

  • Justin Merithew

    If the spectrum auction has restrictions so the smaller carriers have a fair chance I don’t think it’s needed. However, if the house blocks the restrictions the only way they’ll have the financial muscle to compete is to merge.

  • Jonathan Nedry

    This is a terrible idea for T-mobile. For Sprint, it may be their only way out. If there was a merger, terrible things would happen in the short term. Remember how T-mobile stopped trying when they were waiting for a merger with att? Also there will be an issue with consolidation, it would be painful and they would need to determine whose network will suffer in the near term, who is redundant and must be fired, how do they integrate systems of payment and UI’s. Things are not going to get better in the near term for t-mobile, they most definitely will slow their pace of innovation and will be hamstrung with Sprint’s disparate network. That is the reason Sprint is having such a hard time right now, they have too many networks with different sets of users on them from previous acquisitions. Plus, the two carriers are on completely different standards. This would be awful for T-mobile and great for Sprint. If a merger occurs it should be when Sprint has one foot in grave and T-mobile is purchasing Sprint.

    P.S. Please don’t give IBT any credibility, they are the worst spam on Google…

  • Mirad77

    So is life, the will always be a number one, two….. Same is true to business. As long as TMUS is generating revenue and profit, it needs not be att but TMUS.

  • Danny Lewis

    Someday, I hope T-Mobile can buy Sprint, LOL!

  • SpintSucks

    If Sprint is successful in taking over T-mobile and T-mobile does not keep the name and brand going then it will be a disaster! People will leave in droves! Sprint is horrible! No coverage, No network, no reliability what so ever. Sprint needs to disappear and T-mobile should remain period.

  • SpintSucks

    If Sprint is successful in taking over T-mobile and T-mobile does not keep the name and brand going then it will be a disaster! People will leave in droves! Sprint is horrible! No coverage, No network, no reliability what so ever. Sprint needs to disappear and T-mobile should remain period.

  • GinaDee

    In the long term the 2 combined companies could benefit in terms of synergies. But as often the case synergies are only realized if everything goes as planned.

    In the short term the two big phone companies will be bogged down with administrative work including integrating each other’s billing networks and this will be a cause of major distraction.

    The smartest way to pull this off, IMHO, is to lease the T-Mobile brand from DT for at least 2 years, put John Legere at the helm, keep existing T-Mobile executive leadership and retire the old Sprint team. All Sprint users upgrading to new handsets will be offered a LTE/HSPA+ capable device (just like Metro users) until they ween off the older legacy CDMA crew.

    The old Sprint brigade at S4GRU of course would disagree as they would want to keep networks separate including the legacy CDMA voice network and continue to run both indefinitely. This is the same attitude Sprint had with Nextel and look how that disaster went.

    • Bryce

      Your last comment isn’t true at all. At S4GRU, we are split in terms of the merger. However, if they do merge, we see both GSM and CDMA networks running until we can go full VoLTE, and we certainly would love to see immediate including of each others LTE bands in new devices.

      You can’t shut down Sprint’s CDMA network like you can with MetroPCS, Sprint has M2M contracts that last until 2020. That means CDMA will have to remain for at least another 6 years.

      I personally think that an aggressive VoLTE rollout will compliment the merging of both networks and will be the most short term effect that we users would feel should it go through.

    • J Torres

      GinaDee, I couldn’t agree more with you. I honestly think if something were to happen, billing systems would be a big concern. If Sprint didn’t purchase Nextel, where would they be right now? I think last place among all carriers. It was pointless to not force Nextel customers onto Sprints network, until recently, if they were going to shut it down anyway.

  • thepanttherlady

    Alright, I’m not as tech savvy regarding networks as some of you so I have to ask. Is it safe to assume that if Sprint and T-Mobile were to merge, the networks would end up being either GSM or CDMA? If that’s the case, how in the world does that help competition with two large GSM carriers and one large CDMA carrier (or vice versus)? I guess I’m not understanding how a merger helps the industry if essentially two carriers are eliminated (e.g. Sprint/T-Mobile due to a merger and AT&T/Verizon due to network). Thanks for any answers! :)

    • z

      If they go gsm it would not be anti compeititive as most of the world is gsm, gsm lets users change phones as well. Cdma does not, also lte is gsm. Also sprint is most likely to change to tmobiles netwoek as sprints 3g network sucks butt, and it would be stupid to turn off tmobiles hspa 42 fall back network for sprints old crap netwoek.

      • thepanttherlady

        So let’s say that the merger happens and Sprint is converted to gsm. What other large(r) carrier does Verizon compete with?

        • Stone Cold

          They would be the largest CDMA provider so at this point there is no company big enough from a technology standpoint.

    • z

      If they go gsm it would not be anti compeititive as most of the world is gsm, gsm lets users change phones as well. Cdma does not, also lte is gsm. Also sprint is most likely to change to tmobiles netwoek as sprints 3g network sucks butt, and it would be stupid to turn off tmobiles hspa 42 fall back network for sprints old crap netwoek.

    • Stone Cold

      If it happened I believe it would be GSM as the CDMA is being killed off for the next gen LTE

  • thepanttherlady

    Alright, I’m not as tech savvy regarding networks as some of you so I have to ask. Is it safe to assume that if Sprint and T-Mobile were to merge, the networks would end up being either GSM or CDMA? If that’s the case, how in the world does that help competition with two large GSM carriers and one large CDMA carrier (or vice versus)? I guess I’m not understanding how a merger helps the industry if essentially two carriers are eliminated (e.g. Sprint/T-Mobile due to a merger and AT&T/Verizon due to network). Thanks for any answers! :)

  • Fooser

    Son wants to limit any breakup fee if a deal did not go through. I do not think T-Mobile would go for that since their growth and good will with customers would evaporate the day any merger with Sprint is announced. Many people hate Sprint but love T-Mobile. Why would T-Mobile risk halting their business growth without a very significant payback if any deal fell through?

  • Jeremy

    This would be like a sprint and ‎Nextel . This would not be good at all. Anyone remember how bad that was? This is a click article till you have FCC saying they would even listen to this or even approve this type of deal. If merger took place it be years before it paid off as lots of work to be done.

  • josephsinger

    Even if Sprint and T-Mobile were combined it would still be a smaller combined company than AT&T and it would be a number 3 player with the same problem Sprint had when they absorbed Nextel unless Sprint becomes a GSM network (again.)

    • PMB01

      They’d only be smaller by a million or so subscribers. Not a big deal and much better than either’s position now.

  • Lan

    Have Sprint buy T-Mobile, keep T-Mobile’s game plans, convert Sprint’s tower’s to T-Mobile’s LTE and GSM network and you have a beautiful network full of coverage. I’d go back to Sprint if that happened.

  • J Torres

    My concerns are the infrastructure of the networks and the name of the merged company if it does happen. First concern I’m thinking of is the name of the company. If Sprint did purchase T-Mobile, I think they could not keep the name because it’s internationally used and SoftBank would be purchasing only T-Mobile USA. By changing the T-Mobile name to Sprint the perception by consumers wouldnt be positive because of the reputation of Sprint. That happened a lot when people stated that Cingular Wireless was “better” than AT&T after the merger. I worked with Cingular during that time and people thought the coverage and overall service was worse. Truthfully, nothing really changed until much later. Coverage actually got better with time but nothing changed, just the name. It was a challenge to explain to customers that it’s just a name change and how AT&T is more globally recognized than Cingular Wireless at that time. If, and it’s a big IF, Sprint could keep the name of T-Mobile it would gain positive growth because it’s globally recognized. But in my opinion I doubt that would happen.
    My other concern is the network. I think most of us know that the gsm network would be best to have for international use than Sprints. I’m just hoping that Softbank knows how much it would cost to convert them all back to gsm with their new sprint spark network deployed. Unless they do how T-Mobile is doing with MetroPCS towers by using their network and spectrum and converting them into LTE coverage. Then it wouldn’t be a big deal.

    Overall, I think it would take a long time for them (Sprint and T-Mobile) to truly show competition with coverage. If a merger did happen, I think with all the spectrum that Sprint has and how T-Mobile has its way of doing business will be a great positive force against the duopoly.

  • spicymeatball

    I am a very loyal T-Mobile customer and don’t want anything to mess with the trajectory they are on. Once 2G/Edge is converted to LTE by 2015 they will be positioned to become number 3 carrier. That is good enough for me. The problem with being bought by someone is usually the buyer’s business model gets forced upon the bought company. Sprint needs to adopt T-Mobiles business model and shake up the market strategy. If they do this then customers and the SEC won’t have near the problem with a merger, but to remove the only carrier driving change and competitiveness is absurd.

  • Winski

    N O …….

  • Noel

    Without even reading the article, the answer to the question is a BIG NO. Tmobile will do just fine without ATT and so too without Sprint. Sprint is the one that need to worry about being competitive.

  • enkay1

    Honestly, I think T-Mobile needs US Cellular. Those 700 and 850MHz licenses would come in handy in the Midwest. Plus, they could definitely stand to gain service in Maine.

  • mn

    Does TMo need Sprint? To quote an old line…like a fish needs a bicycle.