Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
Rumors surrounding Sprint’s interest in T-Mobile US refuse to die, thanks in part to executives at both carriers continuing to dance around the subject without really commenting on the subject. Classic passive-aggressive behavior.
This rhetoric could gain a boost from news this week that Sprint Chairman Masayoshi Son just made all the money in the world through an initial public offering of Chinese e-commerce site Alibaba, which Son’s Softbank owns a one-third stake in. Reports indicated that Son could rake in as much as $58 billion from the IPO, which would seem to be enough to purchase just about anything Son wants. (Ignore the fact that his wealth is built on being leveraged to the hilt. What’s wrong with a little leverage?)
And what does Son want? Son wants T-Mobile US.
We have covered Son’s desire for T-Mobile US for months, with the exceedingly rich executive making appearances in front of dignitaries, television cameras and trade groups in his attempt to drum up support for his further buying into the “mature” U.S. wireless market.
Of course, the same regulatory issues that seemed to have killed off talk of such a deal between Sprint and T-Mobile US remain, with regulators seemingly pretty happy with four nationwide operators, though three could have a nice ring to it as well.
Even T-Mobile US’ parent company Deutsche Telekom seems to think such a deal would not pass regulatory muster, at least in the near term.
And there’s the rub. Sprint and T-Mobile US appear to be on different timelines. In the near term, T-Mobile US is killing it. Customers are flocking to its service in a way not seen in a decade. Sprint, on the other hand, is drudging through an extensive network overhaul program that has impacted network quality and in turn customers are fleeing. Sure, Sprint is still the No. 3 operator and T-Mobile US is No. 4, but how much longer before those places swap.
With his well-groomed billions, Son can remain in the position of being the acquirer if indeed such a Sprint/T-Mobile US scenario were to play out. Son has been aggressive in his positioning of Sprint as an aggressive player in the market and has already thrown more than $20 billion in gaining control.
T-Mobile US, for its part, remains a bit of an outlier in DT’s overall operations, seeming to no longer be “core” to its operations like it once was. Heck, DT was more than willing to give out a minority share in T-Mobile US to MetroPCS shareholders in its attempt to get T-Mobile US’ acquisition of MetroPCS approved.
So, where does that leave us? Well, the regulatory environment is the ultimate decider of such deals, regardless of the noise made by the parties involved. Just ask AT&T. And, with current FCC Chairman Tom Wheeler for now stating his desire to maintain four as the magic number, that would seem to be an end to the conversation.
Thankfully, for those that trade in rumors and innuendo, the powers that be at the carriers involved appear set to continue fostering notions that such a deal needs to be done and thus has to be done. And as long as there is a will on the part of those parties involved and billions of dollars in the pocket of those same players, there is plenty of fodder for this show to continue.
OK, enough of that.
Thanks for checking out this week’s Worst of the Week column. And now for some extras:
–I was never a math whiz, but news this week from Canaccord Genuity analyst Michael Walkley that bitter rivals Samsung and Apple had claimed 106% of first quarter handset industry operating profits would seem to be pretty dominating. (This also seems to back all of those sports claims of athletes giving 110%.)
I know these two have been dominating the space for some time, but the continuation of this despite the best (?) efforts of well known rivals continues to astonish. It’s not like the other device makers are low-profile, mom-and-pop outfits. We are talking Motorola, Nokia, BlackBerry, HTC and LG. These are device makers that are supposedly legit, yet can’t seem to crack the nut that is Apple and Samsung. Amazing!
–Speaking of Apple and Samsung, good to see those tech giants have finally stopped taking up the time and resources of our nation’s court over their little patent tiff. When it was all said it done, a jury awarded Apple less than $120 million in damages, which is about what both companies spend on candy for the break room each month and is likely less than they spent on legal representation during the multi-year dispute. Well done.
–From the “why didn’t I think of that department,” Ericsson released a new study showing that investments in “network quality and performance create sustainable competitive advantages and improved financial returns for network operators.” In other words, invest in your network – presumably using Ericsson equipment – and you network performs better. Huh, who would have thought?
Lending further credence to this theory was that the study was conducted by a Dr. Raul Katz, President of Telecom Advisory Services and Director of Business Strategy Research at Columbia’s business
school, someone who on reading his title would seem to have the qualifications to conduct such a study, but also someone I would think could have come up with the findings before taking Ericsson’s money to conduct the study.
–Finally, T-Mobile US’ marketing efforts received attention this week as the nation’s No. 4 carrier was intertwined in a story on the “Colbert Report” concerning No. 2:
I will leave it at that.
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