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Sprint/T-Mobile Merger is Dead

Phillip Dampier October 30, 2017 Competition, Consumer News, Sprint, T-Mobile, Wireless Broadband 2 Comments

After months of negotiations, it all came down to a matter of control.

Softbank Group Corp., owner of Sprint Corp., has abandoned a long-expected merger between Sprint and Deutsche Telekom’s T-Mobile USA, citing concerns about which company would have effective control of the combined wireless carrier.

At the 11th hour, Softbank’s board of directors in Japan expressed concern the merger would leave Deutsche Telekom with majority control of Sprint’s assets and network, leaving Softbank effectively out of the U.S. market at a time when companies like Sprint and T-Mobile are preparing for the future launch of 5G wireless networks that will likely be a backbone for the future multi-billion dollar Internet of Things (IoT) marketplace. Multiple sources have told both Japanese and American newspapers that SoftBank’s founder and CEO Masayoshi Son had always been reluctant to give up control of Sprint, but had not made the issue a potential deal breaker until the talks were nearly complete and final decisions had to be made.

Deutsche Telekom considered the issue practically non-negotiable, because the international telecommunications company has relied heavily on the financial performance of T-Mobile USA to brighten its financial reports. Deutsche Telekom subsidiaries in Europe have struggled financially as a result of competition and other factors and international accounting rules require DT to have control of assets it wishes to include in its financial reports. Had T-Mobile ceded control of the merged company to Softbank, it could not include its U.S. business in its financial reports.

T-Mobile USA is regarded as the stronger of the two companies, and its German parent is very happy with its U.S. subsidiary. Most analysts argue Sprint needs the merger with T-Mobile far more than T-Mobile needs Sprint, so there was reportedly little disappointment from Deutsche Telekom over the merger talks achieving an impasse. To calm nervous investors, Softbank plans to announce it will step up its investment in Sprint to improve its network and coverage. Sprint customers have heard such promises before, but the fourth largest wireless carrier has continued to lose market share, mostly to the benefit of T-Mobile. Independent tests have shown Sprint’s network often performs worse than its three major competitors in many areas.

Currently there are 2 comments on this Article:

  1. adam says:

    Excellent news.

  2. Kevin S says:

    Very happy to hear this (Current T-Mobile customer).

    And the last paragraph says it all…Sprint is a distant 4th place in terms of reliability, coverage, network speed, and devices. Why in the hell would they think they could merge with T-Mobile, but have Sprint be the dominating and controlling company? T-Mobile holds all the cards as they close the gap with Verizon and AT&T.

    Sprint merging with anybody would be to gracefully kill off the brand and become someone new. Not vice versa. I cant believe they actually thought they could merge and yet maintain control.







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