T-Mobile's Marketing Campaign Shows Why a Sprint Buyout Is a Bad Idea

 
 
By Wayne Rash  |  Posted 2014-01-07 Email Print this article Print
 
 
 
 
 
 
 


Steven Pearlstein, writing in The Washington Post, explained this seemingly odd behavior by describing the effort to break up a non-wireless company, Darden Restaurants, as a way to increase shareholder value. As Pearlstein points out, these investors don't care about the customers, the employees, or the company's place in the community. They are driven strictly by greed. In the case of Son, that greed appears to be helped along by ego.

What's standing in the way of Sprint and SoftBank's efforts to take over T-Mobile is one big protection that Darden Restaurants doesn't have—the U.S. government. For SoftBank to acquire T-Mobile, it must have government permission on several fronts. First, it must have the FCC's permission to acquire the radio licenses currently owned or controlled by T-Mobile. Second, it must get permission from the FCC because SoftBank is a foreign company and third, it must get approval from the U.S. Department of Justice.

The only reason that SoftBank and Sprint haven't already announced their intentions is that they're trying to gauge their chances of success with regulators. Apparently Son and SoftBank have lined up financing and they've held at least some preliminary talks with Deutsche Telekom, although it's not clear to what depth those talks have gone.

The essential problem and the reason that nothing has happened so far is what T-Mobile's charismatic and aggressive CEO is showing about what real competition can achieve in the wireless market. He is disrupting the wireless industry's comfortable and highly profitable way of doing business that basically soaked consumers and made the carriers rich. Problem is Son and SoftBank are going to have trouble convincing the FCC that they are somehow going to be better for consumers.

In fact, if Sprint and SoftBank are allowed to take over T-Mobile, all of that will change. The new Sprint will once again settle down into a comfortable third place while it expends its energies on the nearly impossible task of merging two incompatible wireless technologies—something that nearly killed Sprint the last time it tried it, which is when it bought Nextel.

Unfortunately, if Son, et al., even attempt a merger they will also drag two companies through a protracted and expensive series of legal processes that will hurt both and help neither. The only thing that would be worse for all concerned is if the acquisition were to be approved. That would kill the T-Mobile resurgence, raise prices for consumers and send more business to Verizon and AT&T. There simply isn't a good outcome here, except for one that involves rejecting any proposed merger and allowing Son and SoftBank to find something else to do.



 
 
 
 
 
 
 
 
 
 
 
 
 

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