Marcelo Claure, Town Hall Meetings, New Family Share Pack Plan, Unlimited Individual Plan, Discussion Thread

[Fraydog]

Honestly, I'm all in favor of SoftBank buying the other 20%.
 
Maybe not being in the US capital markets, and not being subject to analyst whims would be a good thing for SoftBank Mobile US/Sprint. No more Craig Muppet. No more other stupid analysts for that matter.
 

It seems the trash mags are taking an even more ill tone with Sprint this year than last.  
 
http://seekingalpha.com/article/2811845-odds-stacked-against-sprint-in-2015
 
While price wars can hurt cash on hand and the stock price, almost two years after being acquired by Softbank, Sprint is still glared at as though it is an independent company without backing.  Bankruptcy?  That isn't looming.  Softbank would either attempt to take the remainder of the traded company, sell off unnecessary assets, or attempt another merger having proven that after aggressive competitiveness,  consolidation must occur.

To be fair, this is exactly why SoftBank has to take Sprint in full ownership. Otherwise, you have a situation where Sprint's brand is so crippled that bankruptcy becomes a danger. The financial picture isn't good unless you look at SoftBank's otherwise solid financials. I doubt Masa would want a bankruptcy and be out his $20 billion. 

 

This is why a rebrand should be considered as well. Maybe consolidation with T-Mobile would have to return as a possibility as well if Sprint is teetering and T-Mobile isn't meeting their financial targets as well. Unfortunately, any consolidation would be a reverse merger and lead to the Sprint platform also being in danger. I am speculating Masa would want SoftBank branding with the T-Mobile network platform powering a new company or T-Mobile operating under SoftBank branding. 

 

I'm not sure the Feds would be too happy because they want four providers, but the market would be sending a pretty clear message here that three is the sustainable number. 

[lou99/maximus1987]

Honestly, I'm all in favor of SoftBank buying the other 20%.

 

Maybe not being in the US capital markets, and not being subject to analyst whims would be a good thing for SoftBank Mobile US/Sprint. No more Craig Muppet. No more other stupid analysts for that matter.

 

 

To be fair, this is exactly why SoftBank has to take Sprint in full ownership. Otherwise, you have a situation where Sprint's brand is so crippled that bankruptcy becomes a danger. The financial picture isn't good unless you look at SoftBank's otherwise solid financials. I doubt Masa would want a bankruptcy and be out his $20 billion.

 

This is why a rebrand should be considered as well. Maybe consolidation with T-Mobile would have to return as a possibility as well if Sprint is teetering and T-Mobile isn't meeting their financial targets as well. Unfortunately, any consolidation would be a reverse merger and lead to the Sprint platform also being in danger. I am speculating Masa would want SoftBank branding with the T-Mobile network platform powering a new company or T-Mobile operating under SoftBank branding.

 

I'm not sure the Feds would be too happy because they want four providers, but the market would be sending a pretty clear message here that three is the sustainable number.

Swallowing tmobile is the lazy way out of having to densify its own network.

[lou99/maximus1987]

Have you looked at what happens when a country goes from 4 to 3? Prices rise. Lookup 3 Austria orange. Prices rose.

What guarantee do we have that the combined sprint tmobile will continue to be a maverick? Nothing.

We'll see in a few months in Germany what's gonna happen to prices now that Telefonica Deutschland has purchased eplus

[lou99/maximus1987]

For a group so against att vzw corporate interests, you sure are concerned with sprints corporate interests. Why aren't you concerned about your own pocketbook? Sprint softbank and son have plenty of accountants to worry about theirs

[Fraydog]

Swallowing tmobile is the lazy way out of having to densify its own network.

To clarify, I'm in the camp that wants four providers unless it is not possible. 

 

The "unless it is not possible" part scares me.

 

For a group so against att vzw corporate interests, you sure are concerned with sprints corporate interests. Why aren't you concerned about your own pocketbook? Sprint softbank and son have plenty of accountants to worry about theirs

That's quite the accusation to throw out. Ultimately I want what is best for consumers.

 

SoftBank acquiring the remaining Sprint shares would give it an easier to road to densify in my humble opinion.

[WiWavelength]

Swallowing tmobile is the lazy way out of having to densify its own network.

 

Uh, no, not necessarily.  I am not sure what densification angle you are taking.  The economy of scale gained by doubling the subscriber count?  Or the number of sites gained by combining the networks?

 

If the latter, that is specious.  T-Mobile site density is quite similar to that of Sprint.  And T-Mobile site location is quite redundant to that of Sprint.  Adding countless sites that are already collocated or within a few hundred feet of each other will not densify the network.

 

All operators -- VZW, AT&T, and T-Mobile, not just Sprint -- need to densify their networks for LTE.

 

AJ

[lou99/maximus1987]

Uh, no, not necessarily. I am not sure what densification angle you are taking. The economy of scale gained by doubling the subscriber count? Or the number of sites gained by combining the networks?

 

If the latter, that is specious. T-Mobile site density is quite similar to that of Sprint. And T-Mobile site location is quite redundant to that of Sprint. Adding countless sites that are already collocated or within a few hundred feet of each other will not densify the network.

 

All operators -- VZW, AT&T, and T-Mobile, not just Sprint -- need to densify their networks for LTE.

 

AJ

I'm referring to what braxton stated: 60k total sites and 50k FTTT though he probable meant backhaul that can support lte.

 

 

Sent from my iPhone using Tapatalk

[JThorson]

To clarify, I'm in the camp that wants four providers unless it is not possible. 

 

The "unless it is not possible" part scares me.

Why do you think it may not be possible? Are you referring to Sprint going bankrupt or something else?

[Boosted20V]

Why do you think it may not be possible? Are you referring to Sprint going bankrupt or something else?

 

Not much FCF available for anyone but T and VZ.

[lou99/maximus1987]

Not much FCF available for anyone but T and VZ.

Maybe getting backhaul and deploying 2.5g would help with that customer leaving problem?

 

 

Sent from my iPhone using Tapatalk

[centermedic]

Swallowing tmobile is the lazy way out of having to densify its own network.

That would make Verizon and AT&T lazy also.

[centermedic]

Have you looked at what happens when a country goes from 4 to 3? Prices rise. Lookup 3 Austria orange. Prices rose.

What guarantee do we have that the combined sprint tmobile will continue to be a maverick? Nothing.

We'll see in a few months in Germany what's gonna happen to prices now that Telefonica Deutschland has purchased eplus

The argument is whether the market can support four national providers. The market pretty much demanded the mergers that happened between 2000 and 2010. If those mergers did not happen then companies would have gone bankrupt and the remaining companies may not have had the capital to invest into their network. As painful as it may be for me to say, three healthy companies  benefits the customer in the long run. Four or even two fiscally sick companies will not benefit the customer in the long run.

[WiWavelength]

Have you looked at what happens when a country goes from 4 to 3? Prices rise. Lookup 3 Austria orange. Prices rose.

What guarantee do we have that the combined sprint tmobile will continue to be a maverick? Nothing.

We'll see in a few months in Germany what's gonna happen to prices now that Telefonica Deutschland has purchased eplus

 

And, sometimes, prices may have to rise.  Be philosophical.  What happens when consumers want more service and faster service in more places?

 

AJ

[utiz4321]

And, sometimes, prices may have to rise. Be philosophical. What happens when consumers want more service and faster service in more places?

 

AJ

Exactly. VZW and ATT have substantially higher prices than sprint and T-Mobile yet they own over 70 of the market. Consumer are saying they prefer higher prices with service in more places and greater reliability. An individual person might not prefer that trade off but it seem not enough to make the alternative model profitable.

[maxsilver]

Exactly. VZW and ATT have substantially higher prices than sprint and T-Mobile yet they own over 70 of the market. Consumer are saying they prefer higher prices with service in more places and greater reliability. An individual person might not prefer that trade off but it seem not enough to make the alternative model profitable.

That's somewhat misleading though. VZW and ATT also post higher margins. Very little of those higher prices actually go to "service in more places with greater reliability". A good chunk of it just ends up as dividends to shareholders.

 

And the price to offer service has dropped substantially, in many metrics. Towers are cheaper now (lease prices have dropped). Backhaul is *much* cheaper now (1000mb fiber is often cheaper than 3 or 6 T1's used to be). Radios / antennas / assorted gear is often cheaper now (our Microwave backhaul radios have dropped from $15k to about $4k over the last seven years, even while doubling in bandwidth speed). Spectrum can be used significantly more efficient now (LTE). Obviously, some costs have risen (Spectrum). Not *all* costs have dropped, but a significant number of them have.

 

I believe the market can sustain four good players. But no one can speak to that for sure, because it's never been tried.

 

I'm not sure the market can support two good players, and two "bad" players (in either coverage or data service). And that's the only scenario that's actually been offered so far, that's the one on shaky ground. But even if that fails, it still doesn't in any way imply that four good players couldn't have happened sustainably in market.

[utiz4321]

That's somewhat misleading though. VZW and ATT also post higher margins. Very little of those higher prices actually go to "service in more places with greater reliability". A good chunk of it just ends up as dividends to shareholders.

 

And the price to offer service has dropped substantially, in many metrics. Towers are cheaper now (lease prices have dropped). Backhaul is *much* cheaper now (1000mb fiber is often cheaper than 3 or 6 T1's used to be). Radios / antennas / assorted gear is often cheaper now (our Microwave backhaul radios have dropped from $15k to about $4k over the last seven years, even while doubling in bandwidth speed). Spectrum can be used significantly more efficient now (LTE).

 

I believe the market can sustain four good players. But no one can speak to that for sure, because it's never been tried.

 

I'm not sure the market can support two good players, and two "bad" players (in either coverage or data service). And that's the only scenario that's actually been offered so far, that's the one on shaky ground. But even if that fails, it still doesn't in any way imply that four good players couldn't have happened sustainably in market.

You misunderstand what higher margins mean. It is a reward by consumers for providing goods and services that are desired or a rent. But near as I can tell VZW and Att have the same rents as T-Mobile and Sprint. So this fact goes rather to my point. Also, I think both in terms of reputation and third party data they provide a better service on average ( individual experience varies to be sure).

[maxsilver]

You misunderstand what higher margins mean. It is a reward by consumers for providing goods and services that are desired or a rent.

 

Er... what? 

 

Margins (or Profit Margins) are the revenue a company keeps from the prices they charge, after they pay all other expenses, for a particular product or service.

 

If you sell a product for $1.00, and it costs you $0.80 to provide that service, your margin is $0.20. If your price to provide a service drops (from say $0.80, to $0.60) and your price stays the same ($1.00) then your margins increase (from $0.20 to $0.40). That's higher margins. It can happen from cost reduction and/or revenue increases.

 

There's other considerations (net/gross, taxes, etc). But that's what margins are. I'm not following what you mean by "a rent".

 

If there is a free market (where "free" means people have free choice between multiple equivalent competitors) then you could claim that consumers "reward" companies through their choice. But that's not the situation we are in today, a number of people pay for Verizon or AT&T not as a "reward", but because in their situation, they have little or no other choice except to take a drop in service quality/coverage/device selection, or abstain from wireless altogether. 

 

But near as I can tell VZW and Att have the same rents as T-Mobile and Sprint. So this fact goes rather to my point.

They do not "have the same rents". Factually speaking, there's a large gap between Verizon / ATT margins, and Sprint / T-Mobile margins.

 

I don't think Q4 2014 is fully released yet, but in Q3 2014, Verizon had roughly 43% EBITDA margins, and Sprint had around 14% EBITDA margins. Verizon's margins are almost triple Sprint's, as of four months ago.

 

http://www.fiercewireless.com/special-reports/how-verizon-att-sprint-t-mobile-and-tracfone-stacked-q3

[centermedic]

 

 

If there is a free market (where "free" means people have free choice between multiple equivalent competitors) then you could claim that consumers "reward" companies through their choice. But that's not the situation we are in today, a number of people pay for Verizon or AT&T not as a "reward", but because in their situation, they have little or no other choice except to take a drop in service quality/coverage/device selection, or abstain from wireless altogether. 

 

I suspect that you did not read that through because you just defined capitalism. The consumer has a choice. It just that some choices are more attractive then others. Even in the case of providing service where others do not and being the consumers lone choice for cellular, that company is still being rewarded by the consumer.

[utiz4321]

 

Er... what?

 

Margins (or Profit Margins) are the revenue a company keeps from the prices they charge, after they pay all other expenses, for a particular product or service.

 

If you sell a product for $1.00, and it costs you $0.80 to provide that service, your margin is $0.20. If your price to provide a service drops (from say $0.80, to $0.60) and your price stays the same ($1.00) then your margins increase (from $0.20 to $0.40). That's higher margins. It can happen from cost reduction and/or revenue increases.

 

There's other considerations (net/gross, taxes, etc). But that's what margins are. I'm not following what you mean by "a rent".

 

If there is a free market (where "free" means people have free choice between multiple equivalent competitors) then you could claim that consumers "reward" companies through their choice. But that's not the situation we are in today, a number of people pay for Verizon or AT&T not as a "reward", but because in their situation, they have little or no other choice except to take a drop in service quality/coverage/device selection, or abstain from wireless altogether.

 

 

They do not "have the same rents". Factually speaking, there's a large gap between Verizon / ATT margins, and Sprint / T-Mobile margins.

 

I don't think Q4 2014 is fully released yet, but in Q3 2014, Verizon had roughly 43% EBITDA margins, and Sprint had around 14% EBITDA margins. Verizon's margins are almost triple Sprint's, as of four months ago.

 

http://www.fiercewireless.com/special-reports/how-verizon-att-sprint-t-mobile-and-tracfone-stacked-q3

Why are consumer willing to pay a premium that leads to the margins ATT and VZW have? After all they choose to. Because the value they derive from VZW and ATT is equal to or greater than the price they pay. Therefore, the premium both those companies are able to command are a reward from consumers. (Basic economics) I mean rents in the economic sense.

[lou99/maximus1987]

Why are consumer willing to pay a premium that leads to the margins ATT and VZW have? After all they choose to. Because the value they derive from VZW and ATT is equal to or greater than the price they pay. Therefore, the premium both those companies are able to command are a reward from consumers. (Basic economics) I mean rents in the economic sense.

Because they bought a bunch of low band 3G spectrum and were able to affordably buildout everywhere.

Then they bought all useful lte lowband spectrum which they … see the pattern?

[Boosted20V]

Because they bought a bunch of low band 3G spectrum and were able to affordably buildout everywhere.

Then they bought all useful lte lowband spectrum which they … see the pattern?

 

They were given the Cellular licenses free of charge if I'm not mistaken.

[Boosted20V]

Here you go:

 

"The Cellular Service dates back to 1981 when the FCC set aside 40 MHz of spectrum for cellular licensing. To issue cellular licenses, the FCC divided the U.S. into 734 geographic markets called Cellular Market Areas (CMAs) and divided the 40 MHz of spectrum into two, 20 MHz amounts referred to as channel blocks; channel block A and channel block B. A single license for the A block and the B block were made available in each market. The B block of spectrum was awarded to a local wireline carrier that provided landline telephone service in the CMA. The A block was awarded to non-wireline carriers. The wireline/non-wireline distinction for cellular licenses no longer exists."

[WiWavelength]

Why are consumer willing to pay a premium that leads to the margins ATT and VZW have? After all they choose to. Because the value they derive from VZW and ATT is equal to or greater than the price they pay. Therefore, the premium both those companies are able to command are a reward from consumers. (Basic economics) I mean rents in the economic sense.

Because they bought a bunch of low band 3G spectrum and were able to affordably buildout everywhere.

Then they bought all useful lte lowband spectrum which they … see the pattern?

They were given the Cellular licenses free of charge if I'm not mistaken.

 

I think the two responses may be missing utiz4321's point.  He is not really asking "why?"  He is posing, then answering a rhetorical question on consumer choice/value and economic rent.

 

AJ

[Vette]

 

Er... what? 

 

Margins (or Profit Margins) are the revenue a company keeps from the prices they charge, after they pay all other expenses, for a particular product or service.

 

If you sell a product for $1.00, and it costs you $0.80 to provide that service, your margin is $0.20. If your price to provide a service drops (from say $0.80, to $0.60) and your price stays the same ($1.00) then your margins increase (from $0.20 to $0.40). That's higher margins. It can happen from cost reduction and/or revenue increases.

 

There's other considerations (net/gross, taxes, etc). But that's what margins are. I'm not following what you mean by "a rent".

 

If there is a free market (where "free" means people have free choice between multiple equivalent competitors) then you could claim that consumers "reward" companies through their choice. But that's not the situation we are in today, a number of people pay for Verizon or AT&T not as a "reward", but because in their situation, they have little or no other choice except to take a drop in service quality/coverage/device selection, or abstain from wireless altogether. 

 

They do not "have the same rents". Factually speaking, there's a large gap between Verizon / ATT margins, and Sprint / T-Mobile margins.

 

I don't think Q4 2014 is fully released yet, but in Q3 2014, Verizon had roughly 43% EBITDA margins, and Sprint had around 14% EBITDA margins. Verizon's margins are almost triple Sprint's, as of four months ago.

 

http://www.fiercewireless.com/special-reports/how-verizon-att-sprint-t-mobile-and-tracfone-stacked-q3

Your point still works because Verizon is wildly more profitable than Sprint, but EBITDA is a terrible metric. It's mostly used in over-leveraged companies (like most telcos) because it skews the numbers in their favor. EBITDA is no substitute for true bottom-line earnings and a full cash flows statement. EBITDA can hide the fact that a company is debt ridden. Verizon is carrying over $100 Billion in long term debt (a lot of which is from the purchase of VZW from Vodafone).

 

Guess which company, Sprint or Verizon, has a much more favorable Debt-to-Equity ratio? Verizon's cash flow statement is so messed up from the VZW purchase, it's almost hard to interpret. I know many investors disagree with me, but I don't think Verizon is all that healthy of a company financially. At least not enough for me to invest in. A big price war in the US and it's going to become mighty hard to service that debt load and keep feeding investors. I own AT&T stock because even though they don't retain a ton of earnings, their cash flow is decent (and will greatly improve if the DirectTV deal is finalized).

 

Here's what is comes down to. Why is Verizon reluctant to give into the price wars? Why do they spout off about keeping a "premium brand" at every investor call? Because they have to. They collapse if they are making Sprint's margins.

[centermedic]

 

 

Here's what is comes down to. Why is Verizon reluctant to give into the price wars? Why do they spout off about keeping a "premium brand" at every investor call? Because they have to. They collapse if they are making Sprint's margins.

I agree that Verizon has to maintain its margins but I would also argue that they simply want to keep them. They believe they have a premium brand and price accordingly. Other premium brands in other sectors rarely if ever engage in price wars with non-premium competitors.