Sprint Dumps CEO and Reportedly Shelves T-Mobile Merger Plans

By Wayne Rash  |  Posted 2014-08-06 Print this article Print
Sprint T-Mobile

Sprint and SoftBank have chosen Marcelo Claure, who is currently CEO of Brightstar, a Miami-based cell phone distributor focusing on Latin America, to take over as CEO of Sprint. SoftBank acquired most of Brightstar last year, and will buy the rest from Claure when he's brought on board as CEO of Sprint.

Unfortunately for Claure, Sprint's downward spiral will be hard to reverse, and while he may eventually be able to turn things around, it's unlikely that he'll be able to reverse Sprint's slide before T-Mobile takes over as No. 3 in the U.S. market.

Now that T-Mobile isn't going to be acquired by Sprint, the big question is: what's next? There's a bid by French wireless carrier Iliad to buy part of Deutsche Telekom's portion of T-Mobile, but that prospect seems to be going nowhere fast.

Mexico's América Móvil, owned by billionaire Carlos Slim, has reportedly been interested in making a bid. And of course there's long-time suitor Dish Network, whose CEO Charlie Ergen, has been interested in buying T-Mobile for some time.

A bid by Dish would have several advantages over one from Sprint, most notably that Dish isn't a wireless carrier, but rather a satellite television service. Dish has plenty of unused wireless spectrum in frequencies potentially useful to T-Mobile and of course, Dish is a U.S. company, which would bypass a number of potential roadblocks at the FCC.

On the other hand, the FCC is already contemplating another merger between a satellite television provider and a wireless carrier in the proposed deal between AT&T and DirecTV, which currently is in regulatory limbo.

But there's another question that is rarely asked in all of the discussion about who might buy T-Mobile, and that is, does T-Mobile need to be rescued? And if so, from what? There have been any number of unsourced reports that T-Mobile's majority owner, Deutsche Telekom, wanted to unload its U.S. subsidiary. But lately DT's actions haven't backed that up.

One of the major stumbling blocks that delayed the acquisition of T-Mobile by Sprint before the FCC nixed the deal was the rapid growth in value of T-Mobile. The company's UnCarrier is credited for generating this rapid growth.

It's so fast that DT has been dragging its feet on any sale of the company because the value of the deal needs to be renegotiated. This is likely the reason SoftBank and DT were unable to reach agreement on some major details such as when a break-up fee would be payable if federal regulators rejected the deal, which looked increasingly likely.

Right now, T-Mobile is very hot indeed, and that may make DT less interested in a sale. T-Mobile has been reporting record revenues and that is making it appear as if a sell-off or radical rescue attempt may be unnecessary. After all, if the company is making solid profits and is in the process of successful world domination, why interfere?

Right now, unfortunately for Sprint, it's not T-Mobile that needs saving, but rather the rapidly sinking Sprint. With its LTE network far from built-out, its prices high and its future uncertain, Sprint needs help. The company has a huge commitment from SoftBank to execute a turnaround, but it remains to be seen if Claure is the person to pull it off.


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