Sprint Apparently Won't Seek T-Mobile Merger Again, Despite Rumors

By Todd R. Weiss  |  Posted 2014-12-15 Print this article Print

Despite lingering rumors that Sprint would again try to buy T-Mobile, Sprint's parent company's moves to cut back have ended the speculation.

Sprint's parent company, Japan's Softbank, is no longer considering a rumored second attempt to acquire T-Mobile U.S., less than four months after the first merger attempt was dropped in August.

In the last few weeks, a rumor surfaced that Sprint might take another shot at buying its smaller rival to increase Sprint's own footprint in the mobile marketplace, but a Dec. 12 Reuters report said that recent moves by SoftBank to shrink its Silicon Valley offices suggest that another merger attempt has finally been scuttled.

The report, based on anonymous sources who are reportedly familiar with the matter, said that the office cuts mean that Softbank "won't revive efforts to buy T-Mobile U.S." When the original merger attempt fell apart, "the companies did not rule out future consolidation," according to the story.

"The Japanese telecommunications company is now transferring 'the bulk' of manpower out of its West Coast operations, including dispersing development engineers to Sprint headquarters in Kansas, said the people, who declined to be identified because the move has not been made public," Reuters reported. "Softbank is also considering renting out one of two buildings it leased at an annual cost of over $3 million to accommodate a T-Mobile-driven expansion, the people said. The building has stood largely empty, they said."

In early August, Sprint dropped its plans to buy T-Mobile after the move was opposed by regulators, according to reports at the time. Sprint had been rumored for months to be seeking a merger with T-Mobile so that the two struggling companies could join together and fight harder to compete with mobile powers Verizon Wireless and AT&T. Neither company ever commented publicly on those rumors until Sprint finally said in August that it was giving up its plans.

Following the aborted merger attempt, Sprint then shook up its executive ranks by replacing its CEO, Dan Hesse, with Marcelo Claure, the founder and CEO of Brightstar, a subsidiary of Softbank.

Things have been pretty busy at Sprint in recent months in other ways, as well.

Earlier in December, Sprint Chief Financial Officer Joe Euteneuer shared an update on the company's network status at a Bank of America investor conference and announced that things have been getting back on track now due to the huge progress made in getting the company's wireless network updated. Sprint had been experiencing network problems and customer losses due to service dissatisfaction in the recent past, but the company's network build-out is now "substantially complete" and will help drive a push for more subscribers, he said.

Sprint has already started some serious attempts to increase its customer base, thanks to a half-price wireless service offer it made recently to existing customers of competitors Verizon Wireless and AT&T if they move their service to Sprint. The "Cut Your Bill in Half Event" also matched a customer's data plan caps at half of their existing rates for new customers who make the service transfer.

The new offer is not set to expire and will be Sprint's lure for new customers in the future. The offer included unlimited talk and text to anywhere in the United States while on the Sprint network, regardless of a customer's current plan. Participating customers had to get new devices through Sprint, but received up to $350 in rebates per line to cover early termination fees with their existing carriers.

The half-price offer was not extended to T-Mobile customers, which is intriguing because Sprint tried and failed to acquire T-Mobile earlier this year.

Since August, the big four carriers—Sprint and its three major U.S. competitors, AT&T, T-Mobile and Verizon—have been continuing to pummel each other over prices, data packages and other features in the war for more customers and revenue.

In November, Sprint apparently again started to get the acquisition itch, some three months after it failed in an attempt to acquire T-Mobile earlier this year, by eyeing the potential purchase of a Los Angeles startup, FreedomPop, according to an earlier eWEEK report. FreedomPop is a free Internet and mobile phone service provider.

Sprint announced disappointing financial results for the second fiscal quarter of 2014, having lost $192 million on consolidated net operating revenue of $8.5 billion, according to a November report by eWEEK. Sprint lost some 272,000 postpaid customers in the quarter and announced that another 2,000 employees will lose their jobs as the company tries to save money and turn its financial performance around, putting more sour notes on its earnings call.


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