Official Tmobile-Sprint merger discussion thread

[danlodish345]

Seems like everyone is forgetting about AT&T.  End of 2017 they were at 165billion in short/long term debt on $160 billion in revenue.  This year they have acquired some more companies so will be adding billions more debt.  Why doesn't AT&T get these doom and gloom debt talks?
Companies are in Sprint's situation.  Or even AT&Ts. Its so common it's expected. A combined New-TMobile will be in a good spot.  If Sprint still had to go at it alone, they still could be in a better spot, but they aren't going to go anywhere.  Sprint doom and gloom over debt has existed on forums or poo poo article writers for years now, but look at where Sprint is.  Still here.  

I definitely admire sprint for improving. The speeds are nice that I cannot argue with. But if you want to consider T-Mobile and Sprint where I live in central New Jersey T-Mobile definitely has the upper hand when he comes over all continuous coverage.


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[RedSpark]

6 hours ago, tyroned3222 said:

Ya, Marcelo didn't seem to really want to comment on that. What he said most of us here could of taken a guess and got that one right ( that they analyze the situation). I think 5G is just about marketing and and letting people know that Sprint won't fall behind this time around. If they keep spending the way they are and maybe a just a little more,I think they will be fine. SoftBank won't invest because it is very risky as nextgencpu said before.. SoftBank has no way of knowing how much market share will result from that investment in the next 3-5 years..

if sprint starts posting 400-800k quaters then softbank will certainly revalue the situation. As of late even the most recent quarter most of sprints post paid adds came from pre paid conversions.. don't know if that is a healthy buisness model for the future .. although it's not bad, but sprint needs new port in from the other carriers.

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Yeah, he’s definitely of the mindset that the merger will be approved. This is not a given, no matter how much lobbying or influence Sprint/T-Mobile throw out there. Just ask AT&T about the “sure thing” merger with T-Mobile. AT&T threw everything it had at that and it still didn’t go through.

If Sprint does have to go at it alone and deploy a competitive 5G network, it will likely need financial support from SoftBank to do it in an appreciable amount of time.

Of course if the merger fails to go through, hopefully Marcelo/Masa are not content to watch their Sprint asset (of which they have an ownership stake of just under 85%) become further devalued and behind due to a lack of sufficient capital to enable it to be competitive in 5G. Maybe this is something they’ll actually/finally appreciate and take action on to rectify by infusing necessary capital to Sprint. SoftBank won’t have T-Mobile to lean on or hide behind as the anchor network as would be case through a merger.

[tyroned3222]

Yeah, he’s definitely of the mindset that the merger will be approved. This is not a given, no matter how much lobbying or influence Sprint/T-Mobile throw out there. Just ask AT&T about the “sure thing” merger with T-Mobile. AT&T threw everything it had at that and it still didn’t go through.
If Sprint does have to go at it alone and deploy a competitive 5G network, it will likely need financial support from SoftBank to do it in an appreciable amount of time.
Of course if the merger fails to go through, hopefully Marcelo/Masa are not content to watch their Sprint asset (of which they have an ownership stake of just under 85%) become further devalued and behind due to a lack of sufficient capital to enable it to be competitive in 5G. Maybe this is something they’ll actually/finally appreciate and take action on to rectify by infusing necessary capital to Sprint. SoftBank won’t have T-Mobile to lean on or hide behind as the anchor network as would be case through a merger.

That would be a smart thing to do , but buisness wise.. SoftBank/Sprint would almost immediately go for another merger...
My thoughts are that if merger does not get approved Sprint should File clean up balance sheet,lean out and then it becomes really compelling for Amazon and Google and Netflix,Facebook to buy imagine the price disruption if those guys teamed up and bought it, after ATT/TW merger

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[RedSpark]

4 hours ago, NYC126 said:

When you are Verizon with 152 million customers, 132 billion on revenue, and spend 17 billion on CAPEX annually without having to do expansions since you already cover the whole US everything comes in handy.

Verizon is a capex monster. No doubts about it.

I’m surprised SoftBank didn’t acquire Layer3 before T-Mobile got to it. That would have been a nice synergy and revenue stream for Sprint.

[RedSpark]

3 minutes ago, tyroned3222 said:

That would be a smart thing to do , but buisness wise.. SoftBank/Sprint would almost immediately go for another merger...
My thoughts are that if merger does not get approved Sprint should File clean up balance sheet,lean out and then it becomes really compelling for Amazon and Google and Netflix,Facebook to buy imagine the price disruption if those guys teamed up and bought it, after ATT/TW merger

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Sprint has been pretty leaned out from what I can tell. It seems like every Earnings Call that they find more costs to cut.

Here’s the Investor Update from the last Earnings Call: http://s21.q4cdn.com/487940486/files/doc_financials/quarterly/2018/Q1/03_Fiscal-1Q18-Sprint-Quarterly-Investor-Update-FINAL.pdf

Page 14:

 Cost of services (CoS) of $1.7 billion for the quarter decreased $32 million year-over-year and increased $16 million sequentially. The year-over-year decline was impacted by lower wireline network expenses.

and

Selling, general and administrative
expenses (SG&A) of $1.9 billion for the quarter decreased by $71 million year-over-year and $161 million sequentially. Adjusting for the $81 million positive impact of the new revenue standard and $93 million of merger-related costs that did not impact adjusted EBITDA*, SG&A would have decreased $83 million year-over- year and $173 million sequentially. The year-over-year decline was mostly due to lower bad debt and marketing expenses, while the sequential decline was mostly driven by lower marketing and sales expenses.

If the merger fails, I guess I could see Google being a potential merger partner. Sprint/Google have had a number of partnerships over the years like Google Voice integration. We might actually get WiFi Calling on the Nexus and Pixel! ?

[tyroned3222]

Sprint has been pretty leaned out from what I can tell. It seems like every Earnings Call that they find more costs to cut.

Here’s the Investor Update from the last Earnings Call: http://s21.q4cdn.com/487940486/files/doc_financials/quarterly/2018/Q1/03_Fiscal-1Q18-Sprint-Quarterly-Investor-Update-FINAL.pdf

Page 14:

 Cost of services (CoS) of $1.7 billion for the quarter decreased $32 million year-over-year and increased $16 million sequentially. The year-over-year decline was impacted by lower wireline network expenses.

and

Selling, general and administrative

expenses (SG&A) of $1.9 billion for the quarter decreased by $71 million year-over-year and $161 million sequentially. Adjusting for the $81 million positive impact of the new revenue standard and $93 million of merger-related costs that did not impact adjusted EBITDA*, SG&A would have decreased $83 million year-over- year and $173 million sequentially. The year-over-year decline was mostly due to lower bad debt and marketing expenses, while the sequential decline was mostly driven by lower marketing and sales expenses.

If the merger fails, I guess I could see Google being a potential merger partner. Sprint/Google have had a number of partnerships over the years like Google Voice integration. We might actually get WiFi Calling on the Nexus and Pixel! [emoji16]

Ya, cutting down on marketing I wasn't a fan off. I think Sprint needs to spend more on marketing and I think they will do so in Q3&4..

Sprint does need a marketing refresh Paul is getting a bit old imo.. but the higher capex will continue so, they gotta cut else where..

 

Currently, the only thing that is unknown is the network expansion is any happening how many pops does sprint cover now. Sprint hasn't been very vocal about it

 

 

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[utiz4321]

10 hours ago, tyroned3222 said:

Wanted to give a quick summary on what sprint has done since the merger was announced and see what you guys think :

 

Q1 Sprint spent 1.1 billion capex on network improvements. In Q2 ( Sprint is rumored to spend 1.5 billion) much needed..

 

Sprint is aggressively pushing towards network competition.. Sprint has been very close to at&t on national average speeds..this was when band 41 was around 50% complete

Now Sprint should be able to pass at&t as they get close to 70% and beyond

As Terrell pointed out higher uplink is active in his market Ericsson

 

I've been seeing people post that Sprint in adding new tower in Reno Nevada which they havent done so in 10 years.. and now also confused as to why Sprint is merging with TMO

 

 

Marcelo was recently interviewed on Bloomberg

https://www.bloomberg.com/news/videos/2018-08-09/softbank-coo-claure-talks-turnaround-efforts-t-mobile-deal-video

And he was asked what if the merger is not approved.. and he said we have Analyze That.. and I think part of the analyzing was what they are doing now on the network in case the merger doesn't go thru... But Sprint is making strides now they should of made in 2015/2016

 

Wasn't he CEO in 2016? 

[tyroned3222]

Wasn't he CEO in 2016? 

He was CEO until recently, but still a part of Sprint board

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[RedSpark]

4 minutes ago, tyroned3222 said:

He was CEO until recently, but still a part of Sprint board

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Marcelo is the Executive Chairman of Sprint and the COO of SoftBank: https://twitter.com/marceloclaure

Michel Combes is now the CEO of Sprint: https://twitter.com/MichelCombes

[Mr.Nuke]

On 8/12/2018 at 7:48 AM, tyroned3222 said:

Q1 Sprint spent 1.1 billion capex on network improvements. In Q2 ( Sprint is rumored to spend 1.5 billion) much needed..

Lets be clear the guidance is $5 to $6 billion per year over the next 3 years. That would breakdown to $1.25 billion to $1.5 billion per quarter, but I wouldn't be looking at it at that micro of a level. The fact that $1.1 is close enough to $1.2 though right now tells us guidance is holding fairly well right now. We'll revaluate that next quarter when we're half way through the year.

On 8/12/2018 at 8:15 AM, bigsnake49 said:

It was probably part of the merger discussions. As in you better get your network in decent shape or the merger is off. Decent shape as in put band 41/26 on all your sites. 

No this is Sprint following its CapEx plans and assuming it may have to continue operating on its own if a merger fails to go through. The merger documents and terms are public. This was not part of it. Given new T-Mobile would be decommissioning 35,000 sites with most of them predominately being Sprint sites, it would actually be the exact opposite. If you were T-Mobile management in an ideal world you could tell Sprint where to dictate their $5 to $6 billion in spending i.e. keep sites. If not you'd probably prefer them not to be spending a bunch of money on equipment that you at the very least are going to end up having to pay to move and at the most that your going to throw away. You'd rather have Sprint target that $5 to $6 billion on debt reduction or ideally have it sitting there in cash for when  you take over and can spend it right away as you see fit.

On 8/12/2018 at 9:07 AM, RedSpark said:

He sure didn’t sound too happy at the idea of Sprint going it alone and having to spend billions of dollars on network improvements for 5G....

Sprint’s not in a financial position to spend that kind of money, right? Perhaps that money would have to come from SoftBank?

Or we could all just realize the context of the comments and the FCC document they were made in.

 

 Sprint had no problem borrowing the $5 to $6 billion for this year. As long as lenders are willing to continue to lend them money at decent terms, as a company they're fine. Near term they're in ok shape. Longer term that becomes a bit more problematic.

[RedSpark]

4 hours ago, Mr.Nuke said:

Lets be clear the guidance is $5 to $6 billion per year over the next 3 years. That would breakdown to $1.25 billion to $1.5 billion per quarter, but I wouldn't be looking at it at that micro of a level. The fact that $1.1 is close enough to $1.2 though right now tells us guidance is holding fairly well right now. We'll revaluate that next quarter when we're half way through the year.

No this is Sprint following its CapEx plans and assuming it may have to continue operating on its own if a merger fails to go through. The merger documents and terms are public. This was not part of it. Given new T-Mobile would be decommissioning 35,000 sites with most of them predominately being Sprint sites, it would actually be the exact opposite. If you were T-Mobile management in an ideal world you could tell Sprint where to dictate their $5 to $6 billion in spending i.e. keep sites. If not you'd probably prefer them not to be spending a bunch of money on equipment that you at the very least are going to end up having to pay to move and at the most that your going to throw away. You'd rather have Sprint target that $5 to $6 billion on debt reduction or ideally have it sitting there in cash for when  you take over and can spend it right away as you see fit.

Or we could all just realize the context of the comments and the FCC document they were made in.

 

 Sprint had no problem borrowing the $5 to $6 billion for this year. As long as lenders are willing to continue to lend them money at decent terms, as a company they're fine. Near term they're in ok shape. Longer term that becomes a bit more problematic.

Assuming this merger doesn’t go through, do you think Sprint will receive any capital assistance or lender vehicle assistance (like SoftBank helped with previously for handsets and spectrum)?

Respectfully, I don’t agree that the FCC document was written as a “doom and gloom” depiction of Sprint’s future prospects without the merger being approved. I feel like it was a pretty honest acknowledgment and reckoning of what I (and others) feared would happen as a result of Sprint being under capitalized by SoftBank since being acquired. It’s not the acquiring party in this merger. It’s not the anchor network. It’s being referred to as “save sites”.

If this merger isn’t ultimately approved, which is a real possibility, SoftBank is going to be on the hook with an underperforming and under capitalized Sprint asset if it continues to be tight with the purse strings. If Marcelo wants to look at it that way as part of the SoftBank ecosystem, it won’t be a well-performing investment.

I do agree with you that as long as Sprint can make the payments and have people lend them money, they’ll be ok in the short term. However, I am concerned about the long term prospects of the company to remain competitive with sufficient Capex in light of such a high debt load.

[dro1984]

Redspark... perfectly stated!   Very true and well thought out observations of the facts.   

 

By the way, if the merger doesn't go through... it will be status as usual.   I do not see Softbank putting anything more into Sprint.   They will put up on the sale rack all over again and try to get rid of it as fast as possible.   Sprint meanwhile will be in limbo  as other carriers will be well underway with deep 5G deployment.   

Edited August 13, 2018 by dro1984

[BlueAngel]

All I know is if the merger doesn't go through I am jumping ship. ?

[tyroned3222]

Redspark... perfectly stated!   Very true and well thought out observations of the facts.      By the way, if the merger doesn't go through... it will be status as usual.   I do not see Softbank putting anything more into Sprint.   They will put up on the sale rack all over again and try to get rid of it as fast as possible.   Sprint meanwhile will be in limbo  as other carriers will be well underway with deep 5G deployment.   

 

 

If the merger isn't approved: I think the network will finally breakthrough (so to speak) on a market level we will start seeing them score much better on rootmetrics and other 3rd party testing as well in the near future.. coverage expansion will still lack behind, but will be better with the TMO roaming for the next 4 years as TMO will continue to expand..  

 

 

I think the big issue for Sprint will be over coming the negative brand image.. As the network gets better their churn will lower over the next few Quarters(imo).. I just don't know how Sprint will create real foot traffic in their stores to gain maybe a 200-400k quarter..Sprint is showing signs of life, but it's still too early to tell we will have a better picture in their Q2 Q3 numbers..

 

 

At Sprint current customer base 55 million now I believe... If Sprint continues to spend 5 to 6 billion I don't think SoftBank needs to invest or will invest for that matter .. the only reason imo where SoftBank would need to invest between maybe 5-10 billion ... Is a separate capex for strictly expansion to advance Sprint pops of LTE and increase square miles cover by LTE and that would only be to speeds that up

 

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[rockinmusicgv]

I'm not going to pretend to know what technologies will be on the horizon in four years, but if the merger isn't approved I would imagine T-Mobile would renew the roaming agreement with Sprint.  If I were T-Mobile I'd hate to have Sprint sending millions of dollars to Verizon or AT&T when I could be using Sprint's money to develop a 5g network to compete against AT&T/Verizon while also holding Sprint hostage.

[nexgencpu]

40 minutes ago, rockinmusicgv said:

I'm not going to pretend to know what technologies will be on the horizon in four years, but if the merger isn't approved I would imagine T-Mobile would renew the roaming agreement with Sprint.  If I were T-Mobile I'd hate to have Sprint sending millions of dollars to Verizon or AT&T when I could be using Sprint's money to develop a 5g network to compete against AT&T/Verizon while also holding Sprint hostage.

The problem T-mobile has going at it alone is they do not have enough spectrum to feed metros, especially if they expect to deploy 5G in any way shape or form without Sprint. They will need to cannibalize their own spectrum in some markets to at least get the ball rolling. 

[tyroned3222]

The problem T-mobile has going at it alone is they do not have enough spectrum to feed metros, especially if they expect to deploy 5G in way shape or form without Sprint. They will need to cannibalize their own spectrum in some markets to at least get the ball rolling. 

Don't quote me on this , but I think TMO spends a good chunk of money on the upcoming high band auction

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[nexgencpu]

5 minutes ago, tyroned3222 said:

Don't quote me on this , but I think TMO spends a good chunk of money on the upcoming high band auction

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They absolutely need to buy spectrum, but the type of spectrum will matter, it will be super interesting to see how it plays out. 

[tyroned3222]

They absolutely need to buy spectrum, but the type of spectrum will matter, it will be super interesting to see how it plays out. 

But the again ... If the merger is approved I think combined they have enough midband to move everyone of off 2.5 and use that for strictly for 5G

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[derrph]

12 minutes ago, tyroned3222 said:

Don't quote me on this , but I think TMO spends a good chunk of money on the upcoming high band auction

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That MMWAve is going to require them to place small cells pretty close together just like what Verizon is doing. Sprint on the other hand honestly just needs a good cell grind along with their small cells. Their 2.5 travels far enough. From a network perspective in my eyes, Sprint would have the cleaner looking network within cities and not all these small cells every direction you turn. 

[nexgencpu]

1 minute ago, tyroned3222 said:

But the again ... If the merger is approved I think combined they have enough midband to move everyone of off 2.5 and use that for strictly for 5G

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If T-mobile ends up merging with Sprint, it's a nice cushion that they can ride on for years to come from a spectral standpoint, even without jumping in on the next auction head first.

[tyroned3222]

That MMWAve is going to require them to place small cells pretty close together just like what Verizon is doing. Sprint on the other hand honestly just needs a good sense grind along with their small cells. Their 2.5 travels far enough. From a network perspective in my eyes, Sprint would have the cleaner looking network within cities and not all these small cells every direction you turn. 

I don't think that would be a problem for TMO that why 2.5 would work better on their grid .. I think Neville said that in most markets Sprint isn't even within 50% of their network grid  and said it was worse in NYC

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[derrph]

1 minute ago, tyroned3222 said:

I don't think that would be a problem for TMO that why 2.5 would work better on their grid .. I think Neville said that in most markets Sprint isn't even within 50% of their network grid

 

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I can probably agree with that. Sprint needs work in many cities. Which is what they are doing now but as a fallback in the case the merger falls through but to for better prep for 5G. This is really their chance to shine. 

[tyroned3222]

I can probably agree with that. Sprint needs work in many cities. Which is what they are doing now but as a fallback in the case the merger falls through but to for better prep for 5G. This is really their chance to shine. 

Yup in my market

Sprint : 60 macro sites

T-mobile : 156

It would take Sprint a long time to catch up to that macro count

 

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[danlodish345]

They absolutely need to buy spectrum, but the type of spectrum will matter, it will be super interesting to see how it plays out. 

I just want to see them improve actual coverage. Building out a fifth generation network is nice but it means jack squat when the coverage is still not back great. Obviously Sprint and T-Mobile have improved tremendously speed wise I can definitely commend sprint And T-Mobile improving their coverage that’s great. But I want to have a third big player with a great combination of price speed reliability and overall amazing coverage obviously that won’t come cheap that’s a given. I’m waiting to see what happens with this whole thing is interesting to me.


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