Going Sprobile? Sprint and T-Mobile Merger in the Works
Keep your friends close—but merge with your enemies. That seems to be the thinking behind the news that Sprint is set to acquire rival T-Mobile for $32 billion.
Photo credit: Brendan McDermid, Reuters (modified)
This isn't T-Mobile's first time at the merger rodeo. Back in 2011 AT&T made a bid to bag Big Pink for $39 billion—although the deal never actually went down. The Department of Justice ultimately blocked the marriage in an antitrust lawsuit, basically calling the doomed merger an unholy union that would result in “higher prices, fewer choices, and lower quality products.”
Just a few years later T-Mobile is at a similar crossroads, this time being asked to walk down the aisle with Sprint in a merger that would see the latter acquire its long-time rival for a reported $32 billion.
The big question now—other than what to call the thing; Bloomberg cheekily suggested Sprobile as an option—is what the merger will mean for consumers in terms of coverage area, services, and prices. Some analysts and regulators are a bit skeptical.
So, why are they doing it?
It seems pretty clear that Sprint is looking to increase its market share against formidable competitors. Verizon and AT&T each claim a large percentage of market share. Sprint and T-Mobile together might have an easier time attracting subscribers and building out its combined network, while also saving on operating costs.
T-Mobile has really ramped up its marketing recently with the “Un-carrier” plan, which allows subscribers to upgrade without signing long, binding contracts, offering to pay early termination fees for people who wanted to switch from AT&T, Sprint, or Verizon.
But some analysts are saying that to stay competitive, the merged company (let's just call it Sprin-T), will have to slash its prices, which could have a serious impact on the bottom line.
It's also speculated that if the deal goes through, T-Mobile's notoriously wacky, hot pink-obsessed President and CEO John Legere will helm the combined company—giving him more power to pull the kind of madcap publicity stunts he's become known for. Remember when he crashed that AT&T party back in January?
Although T-Mobile and Sprint reportedly won't be announcing anything official until July—if DC lets the deal go through—Twitter's talking about it now:
Sprobile? T-Sprint? Anything to gang up on Verizon...— Dj Shok - SDM™ (@DjShok803) June 4, 2014
http://t.co/n5pa8zRwqm If T-Mobile merges with Sprint, we're doomed!— Dave (@Dave_Byrdman) June 6, 2014
If Sprint buys T-Mobile, it may have to slash prices: analysts http://t.co/0s4Dhgq6oU— GSV Internet (@gsvinternet) June 10, 2014
T-Mobile would be in a tough spot if regulators nix its deal with Sprint, esp after big $$$ on marketing http://t.co/UjVqcGewfA— CNNMoney (@CNNMoney) June 9, 2014
Gotta root for this guy he's crazy!!! "Legere will reportedly become Sprint's CEO if it buys T-Mobile" http://t.co/9pZDj8yWNm— Jeffrey Czorapinski (@TechDad3) June 7, 2014