Sprint Chairman Masayoshi Son Renews Effort to Buy Out T-Mobile
The downsides of such a merger attempt are many. They end up costing the carriers a lot of money, for example, which is why T-Mobile has insisted on a billion-dollar break-up fee if the merger doesn't happen. "With the deck seemingly stacked to such a significant degree against Sprint's T-Mobile bid, the $1 billion break-up fee could be throwing good money after a bad deal," writes The Motley Fool's Andrew Tonner. And he's right because what would happen in the real world is that T-Mobile would use that extra billion dollars to introduce even more competitive programs in the mobile industry to the detriment of Sprint. What Son appears to be trying to do is to raise enough popular support in favor of his buying T-Mobile to overcome the objections of the Justice Department and the FCC. He's doing this by playing on everyone's dislike for their cable companies. What Son is saying now is that, by buying T-Mobile, he can bring better, more competitive Internet service than is currently available from the likes of Time Warner, Comcast and Verizon. How exactly Son plans to equate wireless communications, even Long Term Evolution (LTE), with cable Internet providers remains a mystery. Neither Sprint in the United States nor Softbank in Japan are bandwidth leaders. Neither is a major Internet service provider, nor has either company shown any leadership in providing Internet access.But just because the FCC adjusted its proposals in the face of a regulatory vacuum doesn't mean it's going to significantly change its policy in an area where the regulatory groundwork is in place. The FCC recently has been very clear in its stand on telecom competition. The bottom line when it comes to wireless competition is that both the FCC and the DOJ clearly feel that more competition is better than less competition. The FCC knows that a third large wireless company like Sprint isn't going to provide that level of competition. So where does this leave Sprint and T-Mobile? Clearly, Softbank and Son have decided to move ahead on the merger. But Son isn't the type to back down when he decides he wants to spend his billions on something new. Now that Son has found a way to restart the acquisition process, it'll get shot down, and he'll still have to pay T-Mobile a billion dollars—something he would like to avoid doing at all costs. T-Mobile may be a little weaker because of the distraction caused by the merger maneuvering, but all that break-up money will make up for the inconvenience. But that's better than the oblivion planned for Sprint if the merger succeeds because then T-Mobile will become the surviving corporation, and its high-profile CEO John Legere will take over. When that happens, Sprint would eventually vanish as a brand in the U.S. telecommunications industry.
Meanwhile, Son has been championing Internet freedom using net neutrality phrasing. Apparently, the idea here is to get neutrality advocates on his side in his effort to sandbag the FCC. Perhaps, he saw the reaction of Chairman Tom Wheeler in the face of net neutrality concerns before releasing the FCC's Open Internet NPRM (or Notice of Proposed Rulemaking).