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Analysts Claim Sprint, T-Mobile Have to Merge or One Will Fail

While Sprint's attempt at acquiring T-Mobile isn't looking likely, at least one analyst claims that if the companies don't merge -- one or both of them will fail. According to analysis from New Street Research, the companies have to merge if they're ever going to effectively compete with AT&T and Verizon. That's been Sprint Chairman Masayoshi Son's sales pitch so far, though most consumers don't like the idea of T-Mobile going away.

"Our analysis shows that neither Sprint nor TMUS have enough revenue to cover their fixed costs and it is highly unlikely that both will capture enough new revenue to do so," note the analysts, stating that both companies need to raise $10 billion in the next 18 months to remain competitive.

There seems to be a lot of sudden calls for a merger from some strange corners of the Internet, but is it really necessary?

With SoftBank's deep pockets Sprint would appear safe from collapse, and T-Mobile could attract other suitors outside of Sprint (like Dish) while gaining subscribers via their "uncarrier" strategy. While Son has argued that Sprint would be more disruptive after acquiring T-Mobile, it's equally as likely that the carrier could decide to take advantage of the reduction in competition to simply act more like AT&T and Verizon.

Most recommended from 56 comments



jseymour
join:2009-12-11
Waterford, MI

5 recommendations

jseymour

Member

If It Was The Sprint Of Old...

If it was the Sprint of old, back when I first signed-on to Sprint, I'd be a merger cheerleader. That Sprint was disruptive. That Sprint was wholly unlike the other wireless carriers. That Sprint was bold, adventurous, innovative. The Sprint we have today is essentially indistinguishable from the two major players, "at&t" and VZW, save they have coverage and Sprint does not. In fact: In my personal experience: Sprint's coverage has become worse, since they started deploying Network Vision, rather than better.

Who's doing today what Sprint used to do? T-Mobile. Only T-Mobile.

"Oh, but Masayoshi Son is going to do Wonderful Things!" Really? Son has had Sprint for nine months and the sum total of the changes he's wrought? "Sprint's marketing is lousy." Yup, that's it: He's disposed of whatever marketing style Sprint used to use, and replaced it with another. That is certainly an improvement, eh?

We're to believe it would be a Good Thing for a company that's essentially indistinguishable from "at&t" and VZW, other than that's it's more poorly-run, to absorb the only competitor that's actually doing anything interesting in the market?

Yeah, I buy that.

Meanwhile: After having had all of Sprint we could take, we've been with T-Mobile for about the length of time SoftBank's owned Sprint, and T-Mobile keeps giving us new, concrete reasons to stay with them.

Jim