T-Mobile-Sprint, Part 2

A few days ago, we posted a piece on a possible merger between T-Mobile and Sprint. We featured a couple of blog entries – one from T-Mo News, the other from the New York Times. Both were reacting to an article in the July 12, 2010 Financial Times in which Sprint CEO Dan Hesse remarked that such a merger "made sense."

Meanwhile, the response on our Facebook page was pretty amazing. There is not a love for Sprint out there, folks.

Outgoing T-Mobile CEO Dotson and Sprint CEO Hesse at CTIA 2008

But the mainstream press keeps writing about this potential merger, so we are exploring further.

In the blogosphere, several writers weighed in. Ed Oswalt thinks that LTE holds the key in the transition from 3G to 4G technologies: he suggests that Sprint will move from WiMax to LTE at least partially to take advantage of cool equipment the manufacturers will produce. If AT&T Mobility and Verizon Wireless transition to LTE and T-Mobile does the same, Sprint's use of a different technology for 4G service could put it at a competitive disadvantage.

Brad Reed makes the point even more forcefully. The real fear for Sprint is being the only carrier among the big four offering a different technology.

CNET on July 14 wrote about the technology and suggested that the two technologies at Sprint Nextel – CDMA and iDEN – were not blending effectively and that to add T-Mobile's GSM would simply ratchet up the integration problems. The article also points out that Clearwire (in which Sprint has a significant ownership stake) cannot move seamlessly between two 4G technologies – WiMax and LTE. Reed argues this point as well. But here it becomes interesting: Sprint's advantage in getting Clearwire up and running early means that it will have an early mover advantage and will have excess capacity and be able to offer unlimited data plans.

Talking behind the scenes at Sprint

So a T-Mobile-Sprint merger? Who can read the minds of T-Mobile CEO-designate Philipp Humm or Spring CEO Dan Hesse? Humm was in charge in Europe when T-Mobile UK moved itself into alliance with France Telecom's Orange to create the joint venture Everything Everywhere.

Kevin Tofel does not think it is a sure bet [ ] because Deutsche Telekom would not want to abandon the U.S. market. The Real T-Mobile does understand that 24% of DT revenues comes from its U.S. subsidiary.

According to the Gerson Lehman Group, T-Mobile needs spectrum, Sprint has excess spectrum. But it does not have to be merger. T-Mobile can purchase the spectrum from Sprint / Clearwire.

The blogs and newspapers are not definitive. We expect this topic to continue for quite a while. One thing appears certain, however, T-Mobile has a much better reputation for customer service than its potential merger partner, and the prospect of merger terrifies T-Mobile customers.