NEWS ANALYSIS: Sprint is reportedly considering selling its business to Japanese mobile carrier Softbank. But it should consider doing a number of other things before it throws itself into the arms of a buyer.
Sprint is in the midst of a major transition. The company is currently trying to keep pace with AT&T and Verizon Wireless while struggling with a cash crunch that prevents it from modernizing and expanding it mobile network as fast as it needs to.
All the while, its customers are deciding that unless it starts delivering better coverage, they’ll start migrating to competing company’s mobile services. The issue is so bad that Sprint has reportedly been seeking any and all ways to stabilize its business.
According to the most recent report, Sprint is talking with Japanese mobile carrier Softbank seeking the money it needs to stabilize and expand its business. According to Sprint, Softbank could invest heavily in the carrier
, paving the way for Sprint to either be fully acquired or see its current major shareholders hand over majority ownership to Softbank. In either case, it appears that a major move is afoot.
But should that major move involve Softbank? Sprint needs cash and stability
, but it shouldn’t give up its independence in one transaction.
There are a number of options Sprint should do before it throws itself into Softbank’s arms.
1. Become the top coverage company
Sprint’s biggest issue right now is that its chief competitors, AT&T and Verizon Wireless, have far better wireless coverage. The only way to address that is for Sprint to invest more heavily in towers to expand its coverage. The company might also consider auctioning some of its wireless spectrum holdings to raise the funds needs to increase LTE service across the country. It’s all about service. Sprint must not forget that.
2. Consider a regional carrier merger
Before Sprint runs off and sells itself to Softbank
, the company should consider merging with a regional carrier. Recently, Deutsche Telekom announced that T-Mobile would merge with MetroPCS. Perhaps now is a good time for Sprint to consider its merger options across regional carriers and start to consolidate its operation.
3. Find other ways to raise cash
Sprint needs cash. Lots of it. But rather than sell itself to Softbank, Sprint should remember that it can probably take out a significant loan to help fund its growth. Sprint can also work with private equity firms to see if they have any interest in buying up some shares. A major sale is not necessarily the best way for Sprint to raise cash.
4. Change management
Dan Hesse has been Sprint’s CEO for a long time. During his tenure, he has made his fair share of mistakes (we’re looking at you, Nextel). Now, he’s running a company that is posting quarterly losses and doesn’t have a strategy to fix its business short of engineering some sort of buyout. Perhaps the time has come for some new management at Sprint.
5. Warm up to Samsung
Samsung is Apple’s top competitor and arguably the only other company besides the iPhone maker that actually knows how to build a high-quality smartphone. So, what better way is there for Sprint to reassert itself than to enter into a sweetheart deal with Samsung for early access to its best smartphones? It might not be easy, and the terms might not be ideal, but it would get customers coming into the store. And at this point, that’s what Sprint needs
6. Warm up to Google
If Sprint can’t find a way to cozy up to Samsung, it should try to play nice with Google. The search giant has, for a long time, been the leader in the mobile space with Android. Whenever it launches its Nexus-branded devices with vendor partners, it usually offers them exclusively on a single carrier’s network. Maybe Sprint can get in on that action more than it does right now.
7. Win on plans
Sprint should be happy with the decisions AT&T and Verizon Wireless have made. Both companies are now forcing customers into limited data plans, and Verizon’s Share Everything initiative, which forces an entire family to share a finite amount of data. That gives Sprint an opening. If the company can modify its plans and make them more consumer-friendly, it could start to attract more customers.
8. Win on price
Pricing is central to anything Sprint will do in the coming years. If the company doesn’t win on prices, it will fail. But prices don’t solely relate to plans. The company must be willing to reduce early-termination fees and offer up stronger subsidies on devices. Pricing matters all across the board.
9. Launch a full-frontal assault on T-Mobile
AT&T and Verizon are the big fish in the mobile market. The prospects for Sprint winning over a significant number of their customers and trying to catch up to them anytime soon are poor to say the least. T-Mobile, however, is ripe for targeting
. So, perhaps Sprint should launch a full offensive on T-Mobile and try to woo some of its customers. If it can cripple T-Mobile, Sprint could go a long way in regaining its footing.
10. Do nothing
Finally, perhaps Sprint shouldn’t do a thing. Although times are tough, they’re not dire. And with the iPhone on Sprint’s store shelves for only about a year, maybe Sprint should wait to see how things shape up over the next year or so. Sometimes, doing nothing is just as good as doing something major.
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