Sprint one step closer to buying T-Mobile


While it didn't exactly sneak up on anyone who's been watching the wireless mobile space, The Wall Street Journal is reporting that Sprint is close to bidding on the purchase of mobile wireless provider T-Mobile in early 2014. In an odd twist, it appears the Department of Justice's antitrust settlement on the merger of American Airlines and US Airways may have given Sprint the final shove it was looking for. 

Initial reports put Sprint's tentative cash outlay at $20 billion, which may chafe T-Mobile execs a bit since AT&T was willing to pony up nearly double that amount during bid talks in 2011. It appears some investors are already willing to hedge their bets that the deal will take shape, however. Shares of T-Mobile jumped 8.6 percent on Friday to $27.64, the largest single-day gain the wireless carrier has seen in over a year.

Of course, plenty of pieces need to fall into place before a purchase of this magnitude sees the light of day. As FierceWireless' Phil Goldstein notes, the technology hurdles alone could keep this deal from ever getting off the ground since the companies use different spectrum bands for their LTE, HSPA+ and CDMA services.

Even if Sprint and T-Mobile can find a way to harmonize their technology, PCMag's Sascha Segan suggests the purchase would still be a "disaster." Chief among his concerns are what it means for consumers.

"Companies in the midst of major mergers tend to burn a lot of time and energy on figuring out how to merge their businesses. Employees and customers flee. Marketing gets confused. Innovation becomes impossible because all of the operating units are figuring out how to synch existing systems rather than pushing new ideas forward…" says Segan. "U.S. consumers can't afford Sprint and T-Mobile navel-gazing for 18 months."

To be sure, the potential for a negative impact on consumers is high. If Sprint does end up purchasing T-Mobile, that would leave only three major wireless providers to choose from--an arrangement that hasn't worked out so well for Canada.

In the end, many industry watchers say the purchase is a long shot at best. As VentureBeat's Dylan Tweney points out, "This merger may be an interesting transaction from the financial markets' point of view. But it's unlikely to reach completion given the regulatory, technology, and market hurdles facing it. And if it does, somehow, manage to come about, it's only going to buy Sprint and T-Mobile a little time at best."

For more:
- read WSJ's article (sub req.)

Related Articles:
Report: Sprint is considering a bid for T-Mobile
Verizon, Sprint, T-Mobile to gain M2M customers from AT&T's plan to shut down 2G network

Filed Under