Giant International Egos May Derail The Sprint T-Mobile Merger

from the synergies,-yo dept

We've been discussing how Sprint's plan to merger with T-Mobile would be notably awful for the wireless industry. Not only do Wall Street analysts predict it would kill anywhere from 10,000 to 30,000 jobs (potentially more people than Sprint even currently employs), but it would reduce the number of major competitors in the space from four to three -- dramatically reducing the industry's incentive to compete on price and service. The resulting competitive lull could derail many of the good things a resurgent T-Mobile has encouraged in the sector (like the death of long-term contracts and the return of unlimited data plans).

Given the giant industry rubber stamp that is Trump FCC boss Ajit Pai, many analysts believed the administration would approve the deal anyway. Sprint and its Japanese owner Softbank have spent the better part of the year buttering up the Trump administration in preparation for regulatory approval, going so far as to custom craft some job creation bullshit synergies Donald could easily use to justify approval of the arguably-awful deal.

Unfortunately for Sprint lobbyists, they may never get the chance. This week reports out of Japan indicated that Softbank Chair Masayoshi Son had walked away from the negotiations table after a dispute over who should have the most control over the freshly-merged company:

"SoftBank Group plans to break off negotiations toward a merger between subsidiary Sprint and T-Mobile US amid a failure to come to terms on ownership of the combined entity, dashing the Japanese technology giant's hopes of reshaping the American wireless business. SoftBank is expected to approach T-Mobile owner Deutsche Telekom as early as Tuesday to propose ending the talks. They had reached a broad agreement to integrate T-Mobile and Sprint -- the third- and fourth-largest carriers in the U.S. -- and were ironing out such details as the ownership ratio."

T-Mobile and its owner Deutsche Telekom obviously want to retain control of the brand identity of T-Mobile in the wake of the deal, since the company has been immensely successful thanks to actually listening to customers (mostly). Sprint in contrast has stumbled through the last several years loaded with debt, and hasn't been able to craft a brand identity (or a working network) that truly resonates with consumers. It's not particularly surprising that T-Mobile and cheeky CEO John Legere want more control over the merged company than Sprint and Softbank may be willing to give.

The problem for Sprint at this point is that the only thing holding up the company's stock price for most of this year has been merger rumor and speculation. As such, some Wall Street analysts think Sprint might want need to go private if it's to survive fallout from the deal's collapse, while other analysts say failure to finalize the deal could erode up to $50 billion in theoretical value between the two companies:

"(I)f these management teams fail to get this deal across the goal line, they have failed to do their job,” New Street wrote. “They will be walking away from close to $50 billion in value. Regardless of what either side things their asset is worth on its own, adding $50 billion to that starting value would be a big enough increase in value that they ought to have found a way to get the deal done.”

A scuttled deal would be good news for T-Mobile's Legere, who might find synchronizing his consumer-friendly brand with the competition-killing deal a tall order. That said, it remains entirely possible that Sprint's leaked decision to walk away from the negotiations table is a bluff. Since Sprint needs the deal much more than T-Mobile does -- it's more than possible the two sides will still find a way to get the deal done. Should that occur, we can look forward to a winter filled with entirely bogus "synergy" promises as investors wait to see just how big of a mindless rubber stamp the Trump administration truly is.


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  • icon
    Berenerd (profile), 2 Nov 2017 @ 7:10am

    If 2 individuals built of greed can't share, what hope is there for the rest of the world?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Nov 2017 @ 7:55am

    Aji[n]t Pai[d]

    get it straight

    reply to this | link to this | view in chronology ]

  • icon
    orbitalinsertion (profile), 2 Nov 2017 @ 8:05am

    I am trying to fathom what case Softbank thinks it has for any control of a merged corporation besides ego. It's a bailout for Sprint.

    Then again I suppose there is precedent, but still no case.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Nov 2017 @ 8:34am

    So the plan to make America great again involves letting two foreign based multinational telecommunication companies merge whittling down the competition? And before someone points out, I understand the companies try to avoid overlapping spo they avoid as much competition as possible.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 2 Nov 2017 @ 8:48am

      Re:

      do you not already realize how much our economy is dictated by foreign interests?

      1/2 of America is not even American.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 2 Nov 2017 @ 9:23am

        Re: Re:

        and who is selling us out?

        Uh-huh ... the same people who encourage nationalism ... wtf?

        reply to this | link to this | view in chronology ]

      • icon
        orbitalinsertion (profile), 2 Nov 2017 @ 9:32am

        Re: Re:

        And how much foreign policy is dictated by US (or formerly US) corporations? IKR?

        I remember when it was Japan buying everything. Unfortunately, people are allowed to own stuff. One weeps for US hegemony. (I imagine it's like Dr. Smith from Lost In Space.)

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 2 Nov 2017 @ 10:31am

        Re: Re:

        And worldwide it is american banks nickel and diming at every potential deal, while US funds take ownership of more politically controversial assets. Reinsurance companies and other dealing only with companies and money operate in tax havens etc.

        If you want to assign a winner of the free economy, it can be no other than international companies. Nationality is for losers.

        reply to this | link to this | view in chronology ]

    • icon
      JoeCool (profile), 2 Nov 2017 @ 2:18pm

      Re:

      Of COURSE it's good for America! Instead of TWO foreign companies competing for US customers, you'll only have ONE foreign company.

      /s

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Nov 2017 @ 8:17pm

    MyNameHere's not going to like this, is he?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Nov 2017 @ 7:21am

    Have any of you twits (who are also apparently as negative on Sprint's financial condition as you are approving of this alleged merger) considered what happens to financial markets, employees, and competition when Sprint finally fails, goes into bankruptcy and/or Softbank slices up the company and sells its assets off anyway?

    You falsely assume Sprint will continue to be a going concern without a partner. And there are no other realistic partners regardless what you read about cable.

    reply to this | link to this | view in chronology ]


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