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T-Mobile Wants $1 Billion Break up Fee For Sprint Deal
by Karl Bode 06:30PM Monday May 12 2014
Sprint (SoftBank) seems dead set on trying to acquire T-Mobile, even if consumers really don't want them to and regulators aren't likely to approve it. In an indication T-Mobile isn't particularly interested in having its time wasted, anonymous sources suggest that T-Mobile is looking for a $1 billion break up fee should Sprint's attempted acquisition fail. The two companies are also considering waiting on such a deal, either after the upcoming 600 MHz spectrum auction, or even longer:
quote:
The carriers are working toward securing a deal in the near term, the people said. But given perceived regulatory opposition, the companies are weighing whether it is worth trying a deal now or waiting until after a government auction of wireless airwaves expected to take place in 2015 or under a different administration, people familiar with the matter said.
T-Mobile won big after regulators blocked AT&T's attempted takeover of the company, scoring billions in roaming agreements, spectrum and cash payouts that allowed them to be the pesky "uncarrier" they are today.

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josephf

join:2009-04-26

Merger bad for competition

A merger means the end of the serious price competition T-Mobile has been bringing to the market for the past couple of years.
ITGeeks

join:2014-04-20
Cleveland, OH

Re: Merger bad for competition

Something Sprint wants to get rid of. After all look at what they charge for their prepaid under the Sprint brand. $60 unlimited? $55 under Boost/VM for a smart phone before they knock in the price drops every 6 months on BM. Still not worth dealing with most Sprint reps let alone call centers.

fonzbear2000
Premium
join:2005-08-09
Saint Paul, MN
They would still be competing with Verizon and ATT.
--
I love my autistic brother so much!
78036364

join:2014-05-06
USA
said by josephf:

A merger means the end of the serious price competition T-Mobile has been bringing to the market for the past couple of years.

You're assuming T-Mobile is actual competition which it is not. Most people mistaking believe we have 4 nationwide carriers. we don't. we have 2 and 2 quasi national carriers. Competition would be better served with 3 nationwide carriers.

Verizon and At&t know that over 30% of their customers can not leave for T-Mobile. This is why they don't have to react as much to what the un-carrier does.
itguy05

join:2005-06-17
Carlisle, PA

1 recommendation

Re: Merger bad for competition

quote:
Verizon and At&t know that over 30% of their customers can not leave for T-Mobile.
That's still 70% of your customers that can leave for the competition. Nobody likes to loose the vast majority of their customers.
ITGeeks

join:2014-04-20
Cleveland, OH
And if that's the case explain the adds TMO is adding. Someone is losing them

MovieLover76

join:2009-09-11
kudos:1
I think competition would be better served by leaving T-mobile alone, letting it get a full blanket 600Mhz spectrum in the upcoming auction and letting it grow.

Sprint is the carrier that truly isn't competitive or important, and it's experience with merger's prove the case, well that and their horrible network.
Adding T-mobile to Sprint isn't going to magically equal a great nationwide network, first of all their native coverage areas to a large degree overlap, Sprint is only considered to have a larger network because of roaming for the most part.
Second T-mobile and Sprint don't use the same technology so combining the networks is going to cost a lot of money and Sprint will screw it up, like they screw up everything.

Remove T-mobile and all you've got left is a duopoly and mess of two companies that can't compete at all.
mgamer20o0

join:2003-12-01
Norwalk, CA

new business model

try and get companies to buy you out. then do everything you can to block it. get a ton of cash for the effort.
axus

join:2001-06-18
Washington, DC
Reviews:
·Comcast

It would be nice if the government had some clear rules about mergers

I'm definitely opposed to the merger, and I think it would be great if T-mobile got another billion dollars, but it does seem strange that Sprint has to take a gamble if they want to pursue a merger.

There should be some clear standards for when a merger is not allowed. This wouldn't take away flexibility to block a merger, only to save everyone time and money when there's really no chance.

What are some numbers we can measure about T-mobile and Sprint, and the wireless market as a whole, that show this merger shouldn't happen? I'm thinking of simple rules like "none of the top 4 companies in an industry may merge with each other, if profit margin is X% at the top 2".

ArrayList
netbus developer
Premium
join:2005-03-19
Brighton, MA

Re: It would be nice if the government had some clear rules about mergers

rules are never comprehensive enough to work like that.
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1
There's a very specific measurement of industry consolidation the FCC uses to gauge how competitive a marketplace is. I forget the name of it, but it's already in the "danger zone". A new merger would essentially create an oligopoly.
jorcmg

join:2002-10-24
USA

2 recommendations

It's a trap!

So TMO is still good with AT&Ts specrum. They just need the cash this time. TMOs strategy of building their network with other peoples money is brilliant.

tshirt
Premium
join:2004-07-11
Snohomish, WA
kudos:5

1 is never enough...

...go for $2-10 billion, or show them the poison pill.
Time for the board/management of a company with a successful strategy to push back on unwanted suitors.
openbox9
Premium
join:2004-01-26
Germany
kudos:2

Re: 1 is never enough...

It's like playing poker. You don't want to appear too greedy, tipping your hand.

bigballer

@205.214.216.x

1 recommendation

Hope tmobile gets their $1 billion

In one year, their LTE network is vastly superior than Sprint's own network
nonymous
Premium
join:2003-09-08
Glendale, AZ

Re: Hope tmobile gets their $1 billion

said by bigballer :

In one year, their LTE network is vastly superior than Sprint's own network

I am seeing some 800 in Phoenix now. Not lte yet but at least 800 for calls when buried in a basement. When 800 lte hits in Phoenix with Sprint and the Spark takes hold by next year not buried in a basement Tmobile will be a joke.

KA3SGM
- -... ...- -
Premium
join:2006-01-17
West Chester, PA
kudos:1
Reviews:
·Comcast
·Cricket Broadband
·Verizon FiOS

Re: Hope tmobile gets their $1 billion

I already get T-Mo's AWS Band-4 LTE in my basement.

That's using their 1700/2100MHz, AWS spectrum.

Which proves you don't need low band to penetrate a house.
You only need the cell tower close enough.
In this case, I have 2 towers, about a mile away...
--
ROCK 'TIL SUNSET
nonymous
Premium
join:2003-09-08
Glendale, AZ

Re: Hope tmobile gets their $1 billion

Well not everyone is that lucky no matter the carrier. Lower frequencies will help. Even tmobile now has some 700. Now if a merger where the 600 goes so postpone the merger or risk the 600.
There is quantity of scale in more customers. Eventually shut down over lapping cells then have the customer base to build out rural areas. though net america or rural alliance whatever it is called may help both tmobile and sprint even if stay separate.
Yet for closer distances and say large urban areas in a crowded downtown or sports complexes Sprint has the 2500 in large quantities for sheer close by speed.
Yes they are putting spark on most all towers but dense urban areas and micro cells for say sports complexes or large malls convention centers is where it will shine most.
78036364

join:2014-05-06
USA
said by KA3SGM:

I already get T-Mo's AWS Band-4 LTE in my basement.

That's using their 1700/2100MHz, AWS spectrum.

Which proves you don't need low band to penetrate a house.
You only need the cell tower close enough.
In this case, I have 2 towers, about a mile away...

Not everyone lives that close to a tower. Especially to a T-Mobile one. Hell you have to drive 40 miles to get to a T-Mobile tower in my area. T-Mobile will never put towers close enough where 1700/2100 will be effective for all their customers. let alone the 30% of the US they ignore. But I hope they fell like you and bypass the 600 MHz auction. That way Verizon and At&t will get it and actually use it in the 30% of the US that T-Mobile ignores.

KA3SGM
- -... ...- -
Premium
join:2006-01-17
West Chester, PA
kudos:1
Reviews:
·Comcast
·Cricket Broadband
·Verizon FiOS

1 edit

Re: Hope tmobile gets their $1 billion

OK, I have 7 T-Mobile towers within 2 miles from my house.

No coverage issues here, they're the best cellular provider around, with Verizon and Sprint tied for last, with no coverage from either.

This isn't bumblephuck either, it's a metro/suburban area!!!
--
ROCK 'TIL SUNSET

bigballer

@66.249.88.x

2 recommendations

I switched from Sprint which has spark in my area. My nexus 5 got 1 Mbps in my house with sprint. T-Mobile gives me around 30 Mbps down.

The numbers don't lie.
hchen42

join:1999-12-23
New York, NY
Reviews:
·Time Warner Cable
said by nonymous:

Sprint and the Spark takes hold by next year

I think you need to add a big fat "IF". Sprint is very bad with the scheduling. That so-called Network Vision is still not done. Sprint has been harping about it for years. Here in NYC/NJ area, I haven't noticed much differences in terms of service. Actually, I find the voice call quality has gone down. I am on Virgin Mobile USA which uses Sprint towers. Another example of severe delay - Sprint was supposed to merge Boost and Virgin in Q1... nothing and we are already half way into Q2.
political_i

join:2013-11-12

Raise the bet

After the last time and the proven disruption, I would raise the break up by 2 to 4 times that. Market disruption is what T-Mobile is doing and I do not think this will go through easily.
mrdialup

join:2013-11-17

kudos:1
Reviews:
·Callcentric

Re: Raise the bet

Looks like all TMO has to do is break even on service, all their profit comes from the merger fees or penalties. Meanwhile they have gotten a chance to peer into the books of two of the most eligible suitors that courted them and that probably is good information to have from a competitive standpoint. How come Sprint didn't see it coming? Pretty ingenious strategy I would say.
78036364

join:2014-05-06
USA

Re: Raise the bet

said by mrdialup:

Looks like all TMO has to do is break even on service, all their profit comes from the merger fees or penalties.

hardly. And hell T-Mobile LOST $151 million last quarter so they can't even break even on service. They are going to need more than $1 bill to buy any of the 600 MHz spectrum.
ITGeeks

join:2014-04-20
Cleveland, OH

Re: Raise the bet

and that million was in marketing that was spent.

TMo User

@198.151.8.x

Sprint take-over would be fine with me

Here's my experience: I've got a T-Mobile BlackBerry on my own dime, and a Sprint BlackBerry from work.
The TMo phone has much faster service in DC. But when I'm traveling up and down Interstates 64, 81, and 95 in Virginia, it will get varying rates of service, and almost never all four bars. Once I'm on one of the smaller highways - e.g. US 15, 17, 460, etc. - I don't even get roaming service. (?!)
My work phone on Sprint is very consistent. It is noticeably slower at home near DC, but it is much more dependable when travelling.