T-Mobile to buy Sprint


About once a quarter, a rumor of “somebody” buying either T-Mobile or Sprint makes its way around the intarwebs.  And usually, it hasn’t come true.  But this one actually has some bite.  If you’re not interested in the logic behind this, the TL/DL is that Sprint and T-Mobile desperately need each other, and Sprint’s shareholders are murderously pissed at Sprint’s management over sustained gross incompetence.  Read on for the notion.

The current wireless landscape has AT&T on top with 71.4 million subscribers and $47.2 billion (forecast) in annual revenue, Verizon Wireless with 67.2m / $43.9b, Sprint with 54m / $34.9b (forecast), and T-Mobile with 28.7m / $17.5b (forecast).  That’s a pretty big discrepancy in both revenue and subscriber count between the top two carriers and the bottom two.  While the other carriers were all posting near-million-subscriber net gains for the fourth quarter 2007, Sprint actually managed to post a net subscriber loss.  And that’s pretty much been the way things have gone since 2000 or so.

Rumors of a Sprint buyout are nothing new.  Every quarter, the trades light up with rampant speculation over someone hinting at a Sprint buy.  What’s interesting this time around is that Sprint is getting desperate.  Really desperate.  They have enough capital and bandwidth on hand to weather their current storm for a while longer, so they’re in no immediate danger of falling apart.  But somewhere between subscriber loss, poor revenues, monthly executive-shuffling, and bi-weekly advertising changeups, Sprint’s future isn’t very good.

T-Mobile is an interesting choice.  They compliment Sprint and Sprint compliments them.  For example, Sprint has hands-down the worst customer service in the industry (which is the main reason the subscriber adds are so limp); for the last four years, T-Mobile has been recognized as having the highest customer satisfaction in the industry.  Sprint has an overabundance of bandwidth; T-Mobile has enough bandwidth for today, but not enough for tomorrow’s data services.  T-Mobile has no 3G data to speak of; Sprint has the biggest 3G network in the nation.  T-Mobile is starving for customers; Sprint has boatloads of customers who are desperate for change.

Perhaps most beneficial to both is that if Sprint and T-Mobile joined forces, they would be the largest wireless carrier in the nation with over 91 million subscribers.  Not only is this a huge selling point, but it would be a major kick in the nethers to both AT&T and VZW.  Neither regards T-Mobile as a serious competitor.  Verizon Wireless, the one-time industry leader which since 2004 has been telling its employees that it will regain the #1 position “any day now”, would be relegated to third place in a race of three.

That alone has me hoping for a buyout.