Where Do Sprint and T-Mobile Go From Here?

Where Do Sprint and T-Mobile Go From Here?

The on-again-off-again courtship between Sprint and T-Mobile is off again.

The companies announced Saturday that they had halted merger talks because “the companies were unable to find mutually agreeable terms.” The official word followed media reports earlier in the week. The dispute reportedly revolves around whether Sprint’s parent company SoftBank or T-Mobile parent company Deutsche Telekom would own a controlling share in the merged company. According to Japanese financial newspaper Nikkei, SoftBank was unwilling to accept a non-controlling share.

This isn’t the first time a potential marriage between the two companies has fallen through. In 2014, T-Mobile and Sprint called off previous merger talks after it became clear that regulators would block the deal. The latest round of negotiations followed the election of Donald Trump and the appointment of the more telco-friendly Federal Communications Commission chair Ajit Pai.

While the “will they or won’t they?” question is apparently settled for now, another looms: What will happen to each company on its own?

There are other potential suitors for the two companies, including satellite television company Dish and cable giants Comcast and Charter.

Dish, which flirted with merging with T-Mobile back in 2015, has long promised to build its own mobile network. Dish controls ample spectrum and acquired additional rights earlier this year. Buying Sprint or T-Mobile would make it easier to break into the market. “Dish is the most interesting suitor, because it has spectrum and needs to build on it,” says GlobalData analyst Avi Greengart. “However, spectrum isn’t the core problem that T-Mobile or Sprint face—both have existing swaths of spectrum that they are still building out themselves.”

Comcast launched its own mobile-phone service earlier this year, relying on Verizon’s network. The company sold its wireless spectrum rights to Verizon in 2011. If Comcast executives believe the initiative to be a success, Greengart says, that could justify further investment by acquiring a wireless network. Earlier this year, Comcast and Charter announced an agreement not to acquire any wireless companies without each other’s permission, which fueled speculation that the two companies might try to jointly acquire Sprint or T-Mobile.

T-Mobile might opt to stay single. Since 2014, T-Mobile has leaped over Sprint to become the third-largest carrier in the US, reached profitability, and continued to add new subscribers every quarter. The company also acquired rights to a significant chunk of the 600 MHz wireless spectrum earlier this year, which could eventually help it compete against Verizon in rural areas.

“The challenging thing here is that T-Mobile is in much better shape to keep going on its own than Sprint, but Sprint is also a far-less-attractive acquisition target than T-Mobile because of its inferior network and performance,” Greengart says. “So Sprint needs a buyer more than T-Mobile but is less likely to find one.”

UPDATED, Nov. 4, 4:30 PM: This article has been updated to reflect the companies’ official announcement that they had ceased merger negotiations.

Source: https://www.wired.com/story/where-do-sprint-and-t-mobile-go-from-here/

Powered by WPeMatico