Sprint eyes T-Mobile, but pitfalls abound

Sprint eyes T-Mobile, but pitfalls abound

Summary: Sprint buying T-Mobile sounds good on paper, but good luck with combining networks, positioning the brand and being a leader in postpaid subscribers.

TOPICS: Networking, 4G, Telcos

Sprint is reportedly working on a bid for T-Mobile, but a potential merger would be littered with potholes.

According to the Wall Street Journal, Sprint is looking at the regulatory issues surrounding a bid for T-Mobile. A deal would be valued at about $20 billion.

If a Sprint-T-Mobile merger actually happened the U.S. would be dominated by three major carriers---Verizon, AT&T and Sprint. Softbank acquired Sprint and T-Mobile bought MetroPCS. And just about two years ago, AT&T was thwarted in a bid to buy T-Mobile. Regulators' biggest beef is that four major carriers were better for competition.

How exactly would a Sprint-T-Mobile merger help consumers? That regulatory scrutiny is one reason this merger may never happen.

A look at the coverage maps for Sprint (left) and T-Mobile (right).

Previously: T-Mobile, MetroPCS are dead; long live T-Mobile | Sprint-SoftBank $21.6B deal scheduled to close

Nevertheless, there are other issues that make a Sprint-T-Mobile merger less of a slam dunk. Here's a look at the key hurdles:

A hodge-podge of networks. Sprint just got around to consolidating its network by shutting down Nextel. Sprint has CDMA, WiMax and LTE technology behind its network and the latter footprint is trailing AT&T and Verizon. T-Mobile has GSM and LTE as well as HSPA/HSPA+. All you need to know about the network integration of Sprint and T-Mobile is that none of these acronyms really match. It would take years to consolidate these networks and make sense of them unless everything is jettisoned for LTE at some point.

King of prepaid stinks for profit margins. Both Sprint and T-Mobile have big prepaid subscriber bases. Prepaid customers are the least lucrative and least creditworthy. Joy. The Journal put postpaid customers for the combined entity at 53 million, a distant third to AT&T and Verizon.

Brands don't scream domination. T-Mobile hasn't been known for the best network coverage. Sprint has fixed its customer service issues, but still pays the price for bonehead moves years ago. Both companies appear to be headed in the right direction, but T-Mobile Sprint isn't likely to be seen as a juggernaut. The combination of No. 3 and No. 4 still is just a No. 3. There's no leapfrog here.

I'm sure there will be some lovely PowerPoint slides highlighting why T-Mobile and Sprint would rock, but don't get carried away.

Topics: Networking, 4G, Telcos

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  • I want T-mobile to buy Sprint, not the other way around

    It would be better for consumers if T-mobile bought Sprint, not Sprint buying T-mobile. T-mobile has force AT&T/Verizon/Sprint to act better towards customers. I hate to see that innovation disappear. But T-mobile needs more spectrum to be a true nationwide carrier, instead of just being in the big cities. I don't mind T-mobile and Sprint merging, but T-mobile should be the one driving the deal, not Sprint.

    The best thing T-mobile has done for the industry is they started differentiating the monthly service charge from the phone-payback cost. So, when you could clearly see how much the monthly payments on a phone are vs how much you are actually paying for service. AT&T/Verizon/Sprint would charge you $90 - $110 per month and claim it was all for monthly service, which was bull. Up to half was to pay for the remainder of the $600 - $700 owed on your "$200" contract smartphone. But after your contract was paid off, you STILL were paying $90 - $110. AT&T/Verizon/ Sprint would not reduce the monthly bill. T-mobile did, and clearly showed what's going toward phone pay-off and what's going toward just monthly service. NOW, AT&T is doing something similar, thanks to T-mobile.
  • Sprint buying T-mobile is brilliant idea

    Sprint is not stupid.. they would not get rid of the T-mobile brand, it would be stupid to think about that.
    After the merger, Sprint and Tmobile will have more phone more tablets available

    with more subscription install base... it will be easier to get excursive killer phones just on these 2 net works...

    everything is looking brighter. a perfect combo.

    honestly speaking if you are living in a urban area... Tmobile is already way better than verizon and At&t i dont know how you think the combination of Sprint and Tmobile will still be #3

    and this merger is not like when AT&T trying to buy Tmobile.. this merger will help the industry with better competition.

    recently DOJ allowed american airline to be mergered with Us airway.

    so rather than leave the US cellular market to 2 big guys taking more and more market shares..
    its likely that DOJ will allow Tmobile and Sprint to be merged together and provide a better competition in the cellular industry
    • Says who?

      > they would not get rid of the T-mobile brand

      What happened to Nextel, Cingular, US Wireless, and all the other acquired brands? Of course one of the brands would go.

      > After the merger, Sprint and Tmobile will have more phone more tablets available with more subscription install base... it will be easier to get excursive killer phones just on these 2 net works...

      Not for a long time (that's what this article is saying -- Sprint and T-Mobile phones are fundamentally incompatible; either CDMA or GSM (or both, in favor of LTE) would have to die in order for it to be "easier to get exclusive phones" -- also I'll bet they'll lose subscribers during the transition. There's no synergy here.

      > and this merger is not like when AT&T trying to buy Tmobile.. this merger will help the industry with better competition.

      I don't think "competition" is the right word here. When one competitor buys another, that's fewer competitors. T-Mobile is definitely competing with AT&T in the GSM market right now; it's just not #1. Getting bought by Sprint won't get it out of last place, though. That's fine, it's still a healthy competitor.

      > recently DOJ allowed american airline to be mergered with Us airway.

      Yeah and this totally sucks, because jobs are going to leave my town and US Airlines was the only one I'd fly outside of Southwest. Not good.
      • Possible T Mobile Sperint Merger

        T Mobile and Metro PCS merger increased the prices of handsets available to metro PCS customers driving them away to Boost and Virgin networks. A new merger although feasible will further alienate prepaid segment which is major component of T Mobile/metro PCS customer base.
        The network used by metro PCS and T Mobile has resulted into metro PCS network being virtually made redundant.
        It will be interesting to see whose network survives after T Mobile Sprint merger Will it be GSM or CDMA?
    • Wow

      you're way off base in all of it.

      in no place I've ever been has T-Mobile been considered to have the better network over AT&T or Verizon.

      The coverage map app is real people measuring the network and even that shows TMO is at best 3rd in 95% of the country.
  • Senseless

    "Sprint just got around to consolidating its network by shutting down Sprint."

    Wtf does that mean???
    • I read that too

      I think they ment to say sprint shut down the nextel network
  • Not a big fan

    If T-mobile is acquired by Sprint, I won't be sticking around on T-mobile anymore. Sprint is a crap company.
  • Worst Cell Service Provider- Consumer Reports

    Acquisition should be the last thing on their mind. Sprint has no innovation. New to T-Mobile through 35orless. Only good thing is if they bone things up - no contract
    2-connected MG
  • MicrosofT-mobile

    Ever since T mobile was up for sale to AT&T, I thought it would be great if Microsoft were to purchase it (or maybe Google, but I am a Microsoft loyalist). Microsoft would have a chance of disrupting mobile communications by solely selling data plans (w/o voice) and capitalizing on Skype to ensure phone calls through these data plans. I am inclined to believe that offering reasonably priced data plans would undermine the competition whilst adding customers. Additionally, it would be a great venue for Microsoft to showcase their WP8 lineup. I must admit, I don't have much knowledge of how the communications industry is regulated, but I believe Microsoft could have a chance. Now that I read that T mobile is up for sale again, I have rekindled this thought.
    Food for thought
  • T-Mobile vs. Sprint

    Check this out...

    Did you happen to notice that T-Mobile was gunning for AT&T, with no mention of Sprint. That is because TMO is about to surpass Sprint in pretty much every major category that the telecom experts think is relevant. Bottom line is T-Mobiles growth in coverage and speed has Sprint scared. Besides Sprint, At&t is also looking at the major innovations of TMO and trying to keep up. They have both realized that is not even an option. So with Sprint they figure , buy TMO and that will assure that we will not fail for the time being... My forecast is for T-Mobile to deny the deal and also take both At&t and Sprint down to a level that they have not even thought they would have to contemplate. T-Mobile is poised to definitely be the number 3 and likely #2 within the next year and a half. They have to much momentum and to great of a leadership team to not succeed. I put my money on TMO pulling ahead of At&t, leaving sprint in the dust and setting there sites on buying Sprint after the shift in positions....T-Mobile is gaining customers and market share as well as providing the fastest network... , AT&T and Sprint at this point are trying to catch up...

    My wish is that T-Mobile just keeps gunning for #1, they have the momentum.

    • Tmo No !!!

      Tmo keep doing what you have been doing, Sprint see you coming to sleep with enemy. Destroy lol.
      Deshawn Greenfield
    • Playing Catch Up

      At&t us not playing catch up! They're just reacting to a great marketing strategy. It would be virtually impossible for T-Mobile to catch up to them with the current way they do business. Until the coverage problem is seriously addressed, 3rd position will be the ultimate goal.
      Archie Williams III
  • Prepaid bad?

    "...Prepaid customers are the least lucrative and least creditworthy. Joy....". What the heck is he talking about? Many prepaid customers credit is excellent. We know many folks that like prepaid and have excellent credit and plenty of money to boot.
    Look at it another way, maybe postpaid customers cannot afford their devices so they must pay monthly.
    Two sides to every story. I know many folks that have both type of devices as it fits their needs. To say postpaid are not credit worthy is a farce, a lie, and darn incorrect. For many it has nothing to do with credit worthiness, nor money, it is a convenience for them.
    • Oops, should read: To say prepaid are not credit worthy... (NT)

  • If Sprint bought T-Mo

    there would be a mass exodus of T-Mo customers to other carriers. T-Mo subscribers tend to be the sort of people who have good coverage in their areas and do not move out of their areas enough for the coverage issues to affect them. They also tend to be the sort of people who like T-Mo's billing plans, which tend to offer more at lesser cost than the competition. If you give them Sprint's billing plans with Sprint's customer service, they will find another carrier that can meet their needs.
    Michael Kelly
  • So much defense of T-Mobile...

    ...T-Mobile has a garbage network. I'm sorry but it has to be said. When traveling up interstate 35 from Texas and then across on 70, my Virgin Mobile iPhone 5 is able to maintain enough data integrity to easily maintain a Sirius XM stream for roughly 90 percent of that trip, allowing me to not even need to carry my XM radio. Not only that, Virgin Mobile gets LESS priority on the Sprint network then Sprint customers do.

    I made the same trip recently with a Galaxy Note 3 on T-Mobile and found that almost every single time I left anything resembling a metro area, I would drop down to worthless 2G coverage or even just VOICE. What the hell good does voice service do me when I need information in a rural area? T-Mobile is on the way but right now I'm not sure how so many of you deal with Tmo's data coverage.

    I get unlimited everything and the latest iPhones at a discount on Virgin Mobile for 50 bucks a month. Tmo wants 60 or 70.00 a month for a plan anywhere near as good. I say Sprint buy T-Mo and expand their profitability.
    • ...T-Mobile has a garbage network?????

      Try driving more of the country than your country-fied Texas backwater interstates. I have used T-Mo for the cell needs of my airline throughout the world, not just the USA. In the western states of Arizona, Utah, Nevada, well, really ANY "inter-mountain west" place, TMo has much superior service and Virgin is UNHEARD OF, and Verizon scoffed at with huge laughter. ATT manages to SCARE everyone into long term LOCKED CONTRACT phones which are not an option to my European based enterprises. We need unlocked non-contract phones for use in most of Eastern Europe and even in a great portion of Western Europe as well. In the USA, we have very GOOD data reception from Las Vegas to Flagstaff, from Nogales to Boise. I have never been anyplace west of the Rockies where i didnt have a TMo cell signal, and THAT is not only on surface roads, not interstates, but IN MY AIRCRAFT as well, when flying at modest altitudes. I certainly don't need my phone to be a Sirius radio receiver,, i have a car radio for that. I need my phone to place and receive calls and a certain limited amount of data. Heck if i want music, i'll simply use iTunes on MY iPhone5. Are you SERIOUS,, expecting a phone to be a sirius radio set?? Well to each their on in the USA i guess. My use of TMO keeps us functional on a prepaid basis when we have employees working here, and still able to use their unlocked non-contracted phones with local/regional sims in Germany, France, ANY EU country, and for us, especially Ukraine where we're headquartered and in Russian Fed and China as well. When Tmo falls to Sprint or some other Sprint look-alike, we'll simply STOP using cellular in the USA, i have no desire to support the monopolists at AT&T, who force you to their way or no way.. That will be cause to withdraw our airline from the USA and North America as well, which will take the 100 or so million US Dollars we pay in taxes some place else which still believes in Capitalist competition not Socialist Monopoly currently being foisted on us by the U.S. FTC and FCC.
      LyonsAire CEO
  • When will I have one device for everything?

    When will a wireless provider offer me 1 device that will use only wireless broadband for all my communication needs? I will be able to use it for VOIP calling and texting, and my PC, Roku, etc will connect to it when I am at home.

    Right now it seems a bit silly to have LTE for wireless data, GSM for voice and texting, and wired cable Internet at my house. It seems to me that a more extensive LTE wireless network would make all these things unnecessary.

    Is there some technical limitation that prevents this, or is it just because the telecom companies want to keep selling me three different products even though one would do the job?
  • comparing plans

    A couple of months ago, I made a spreadsheet comparing all the carriers' offerings in terms of total 2-year cost of ownership. For me, Verizon's new single line plans were the best deal because I could get a discount for having FiOS as well. However, one interesting thing that I discovered was that for Verizon, AT&T, and Sprint, the plans they have now that are like T-Mobile's only plan (i.e., nonsubsidized phones) all have a higher 2-year cost than their regular subsidized plans. It's not a huge difference (about $40 IIRC), but it's still interesting. If I didn't have FiOS, T-Mobile would have offered me the cheapest 2-year cost. The worst by a large margin was Sprint.