Reports out of Japan say that Deutsche Telekom AG and Softbank have made a deal. Apparently, Softbank’s Masayoshi Son made a proposal in mid-May and Deutsche Telekom AG has agreed, although confirmation seems to be elusive. If true, the deal would bring together Sprint and T-Mobile in the USA to create a strong #3.
Of course, we’ve known that both sides have long wanted to make a deal for some time now — ever since Softbank completed its purchase of Sprint and Clearwire actually. The sticking point has never really been finding an agreement, but rather convincing US regulators that the number 3 really is better than the number 4. Given that we have no details about the deal, it’s hard to make any guesses just what tack the two carriers will take then they try to sell this to the FCC.
T-Mobile’s aggressive push as the ‘uncarrier’ under CEO John Legere has perhaps forced the issue and given the carrier a better possible sale price for Deutsche Telekom. But everyone knows it takes more than buzz to create earnings power, and DT has seemed happy with the idea of going out on a stronger note rather than slog through half a decade as the actual underdog on the way up. Softbank meanwhile is taking the longer view of getting scale and hopefully maintaining the momentum.
A Sprint/T-Mobile merger has been a staple of the M&A rumor circuit for half a decade now. The drawback always was the integration hassles that would come with integrating GSM with CDMA and all that. But with LTE now finally in the ascendant, the barriers have started to erode.
Would the combined companies take on the mantle of the ‘uncarrier’? And might the momentum of T-Mobile’s current juggernaut lose some steam waiting for a deal to close? I suppose we’ll have to wait and see. And since it’s nowhere near a done deal yet and won’t be for perhaps a year even if the rumors are correct, we’ll have to wait a long time.
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Categories: Mergers and Acquisitions · Wireless
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If true, I would suggest that Legere would come out as the CEO of the combined Sprint/T-Mobile companies. The reason I say this is Dan Hesse has not had the demonstrative impact that Legere has in such a short period of time. Breaking the traditional mold and forcing the market to acknowledge the potential threat is something Legere will do post haste if these two companies come together. Legere will also make the tough decisions around managing for margin, harvesting and exiting and or investing and growing – something Hesse has done but taken an inordinate amount of time that likely has placed sprint in unnecessary position of playing catch up.
If given the opportunity Legere should turn down the offer to run the combined company and, instead, take the money and run. If his T-Mobile experience has demonstrated anything, it’s that he’s a much better promoter than he is an operator.
Why take on the hassles and headaches of running and integrating the combined companies when he’ll be showered with numerous more lucrative opportunities elsewhere. Unless the deal is conditioned on him becoming CEO of the combined company, he’d be a fool to stay.
Greedy he is; a fool he’s not.
Rob legitimately asks if a merged company would retain T-Mobile’s momentum and attractive offers or if we would just lose another competitor with nothing to show for it. On my blog I’ve posted 5 keys to this: 1) find a balance between “Uncarrier” and profits 2) fill in the geography of the U.S., no more excuses 3) ramp up capex way more 4) get lots of 600MHz spectrum next year no matter the rules for the incentive auction 5) finally improve Sprint’s consumer branding because that matters even to enterprises in a BYOD world. See http://www.techcaliber.com/blog