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Home > Hot Enterprise Mobility Topics > 3G > Should Sprint and T-Mobile Combine?
Nov122009
6 Comments

Should Sprint and T-Mobile Combine?

Philippe Winthrop

There has been much speculation over the last couple of weeks about T-Mobile making a bid to buy out Sprint…especially after the news that combined, they lost over 500,000 customers in the last quarter.

The common wisdom has been that this would not be a good move for either company, primarily because of the fact that these two companies are on 1) two completely different technology platforms and more importantly 2) there technology roadmaps are divergent.

Call it a slow news week (I won’t comment on “Bada Bing”), but this is something that I have actually been thinking about for some time.  What if I played The Devil’s Advocate and said it was reasonable and plausible? (how’s that for a legal term)

So let me say again, at face value this makes no sense.  Sprint is CDMA today and WiMAX tomorrow (generally speaking), while T-Mobile is GSM today and LTE tomorrow.  Deal breaker – right?  Well, Sprint (for better or for worse) bought an incompatible technology in Nextel a few years back, so there is precedent.  But there are two places where things get interesting.

  1. Both AT&T and Verizon Wireless each has about 80 million customers.  What would happen if Sprint and T-Mobile were to merge?  You guessed it, they would also have about 80 million customers.  Maybe this is why you should believe in numerology.  So if there are now three nationwide companies that each have pretty even share of the market, I will argue that this will NOT be a hinderance to competition.  In fact, I would argue it would fuel it.  An even playing field means that no one is a leader.  To lead, the “three” major players will have to then innovate their offerings in order to get their unfair share of market.
  2. The WiMAX and LTE debate.  I’ll argue it’s almost a moot point.  Why?  Listen to the original Clearwire conference call where the senior management said that they could actually pretty “easily” make a switch to LTE if the market required it.  So if T-Mobile is going to LTE (which you know they will), what’s the matter in running two networks for some time, while consolidating back ends, getting better operational efficiencies and working on a converged network?

Let’s consider one more thing.  T-Mobile is known for great consumer plans and even better customer service.  I was a T-Mobile customer for 10 years and almost always received superior service.  However, T-Mobile is not known for its enterprise mobility chops.  On the other hand, SprintNextel has a legacy (especially from the Nextel side) of having leading enterprise mobility offerings…however, their customer service quality has, on more than one occasion, been called into question.

So what if I argued that these two companies were phenomenally complementary?  One company has great customer service, the other has great enterprise mobility chops, and both offer compelling consumer plans.

Now let’s be clear, I am not confused.  The merger of these two organizations would have to pass several regulatory hurdles and then would be nothing short of a Herculean challenge, but maybe, just maybe, it could work…

6 Comments

  1. Nadine Manjaro
    Posted November 13, 2009 at 12:49 | Permalink

    Based on Sprint last merger with Nextel and the fact that the company is already doing a poor job of managing two distinct networks (iDEN and CDMA/EVDO, the answer is no. T-Mobile has GSM/EDGE with HSPA network so the the combined company would have three different networks plus WiMAX interworking. Since most of these mergers do not seem to work, why put Sprint under more pressure. Sprint needs time to heal itself without any further confusion. Leap and MetroPCS is a more likely option.

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  2. Umesh Satija
    Posted November 13, 2009 at 14:31 | Permalink

    No way, no more mergers please. Both of them still have a long way to go !!

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  3. Robert Youdale
    Posted November 14, 2009 at 08:39 | Permalink

    Ask somebody in Orange & T-Mobile UK! These companies are planning to merge, however, it becomes difficult to see how it benefits either employees or customers of either firm…the only winner I see is the shareholders….

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  4. Jim Hanley
    Posted November 16, 2009 at 10:16 | Permalink

    right idea, wrong couple… Sprint should combine with Leap and MetroPCS (same CDMA tech) and follow their consumer-facing, low cost model. Ressurect the Nextel brand as a separate enterprise-obsessed division (focused! not lipservice like else is doing in the industry). Strategically, they’d have a fighting chance. Being the 3rd best, wannabe, national carrier is not strategically viable.
    Unfortunately, T-Mobile is in a very tough position strategically, barring major investment from a foreign company to make them competitive. Merging with Sprint would be as big a disaster at Sprint Nextel was.

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  5. David Schofield
    Posted November 16, 2009 at 10:34 | Permalink

    Devices supporting CDMA and GSM in the hands of each subscriber and the increased cash flow could make this combination work worldwide. The challenges are many: swapping out existing devices for existing users, expanding both networks in combination of the expansion of Clear, combining billing systems/support/engineering, reduced margins and the slowing growth of the subscriber base. The Nextel merger took a lot out of each of the companies and their subscriber base the last time, blowing it could be a disasterous for both. Could we see international mobile to mobile at no additional charge on a global basis?

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  6. Philippe Winthrop
    Posted November 16, 2009 at 11:44 | Permalink

    Jim – I certainly understand why you say go with Leap and Metro…but even combined, they don’t have the scale and customer base of T-Mo. I know it’s a double edged sword, but as odd as it sounds, can a carrier in the US “survive” with “only” 45 million subs? I know it sounds insane to say ONLY 45 million, but AT&T and VZW are at around 80 million and growing…at the expense of T-Mo and Sprint.

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