Well, at least for now. Both T-Mobile and Sprint have released separate statements during the weekend, saying that they have mutually agreed to call off further discussions with regards to a possible merger transaction between the two major US wireless carriers. John Legere, the chief executive officer of T-Mobile has stated through an official press release that despite the many benefits of a combined entity consisting of the third and fourth largest mobile operators in the country, the proposed deal was not able to offer a superior long term value for the company’s shareholders. Sprint, on the other hand, also expressed through its own statement that ultimately, it had found that the best option for the carrier was to carry on on its own.
For the past several months, Deutsche Telekom (the parent company of T-Mobile) and SoftBank (which owns the Sprint brand) have been involved in discussions that would have created a two headed monster to give industry leaders Verizon Wireless and AT&T a run for their money. But as recently as a week ago, various reports started to surface, indicating that SoftBank was intending to stop negotiations with Deutsche Telekom.
SoftBank was mainly concerned about ceding total control of the combined entity’s operations to T-Mobile. Instead, it was looking to have Sprint invest significantly in the improvement of its network in order to continue to narrow the competition gap between its competitors. There was also talk that Sprint was again initiating discussions with Charter Communications with regards to striking a partnership deal.
Despite the fact that the proposed merger is not happening, several industry watchers are saying that T-Mobile should still be in a good position. Yup, it is true that it did not end up getting its hands on Sprint’s considerable wealth of spectrum assets, but T-Mobile has always managed to attract new subscribers and continue to shake up the wireless industry even without Sprint’s help. As for Sprint, sure it gets to keep its spectrum now, but the merger would have allowed the company to acquire the capital it needs to better compete with the other major US wireless carriers (Sprint currently ranks fourth behind Verizon Wireless, AT&T, and T-Mobile). It does not help that many of its debts will become due in the next years to come, and quite frankly, it is not clear yet how it will be able to find the money needed to successfully invest in upgrading its network, as well as in taking full advantage of its massive treasure chest of spectrum.
