Official Tmobile-Sprint merger discussion thread

[Paynefanbro]

Quote

Claure was also asked about Sprint’s other options for how to survive with nearly $40 billion in debt. While T-Mobile and Sprint have cited the debt as a major reason why Sprint can’t survive on its own, the states presented email evidence demonstrating that that Sprint’s controlling owner, SoftBank Group Corp., was prepared to pay off Sprint’s debt if necessary.

“If we need to pay back most or all of bonds, I’m willing to pay back all of those,” Masayoshi Son, the Tokyo-based technology conglomerate’s founder and and CEO, said in a Dec. 11, 2017 email to Claure.

Read more at: https://www.bloombergquint.com/onweb/sprint-can-survive-without-t-mobile-ex-ceo-claure-testifies
Copyright © BloombergQuint

Lol this is the funniest part. Softbank could've paid of Sprint's debt but instead they let Sprint go it alone just to get the merger to go through and it might not even do that. Can you imagine the position Sprint would be in right now if it didn't have to penny pinch?

[Brad The Beast]

8 minutes ago, Paynefanbro said:

Lol this is the funniest part. Softbank could've paid of Sprint's debt but instead they let Sprint go it alone just to get the merger to go through and it might not even do that. Can you imagine the position Sprint would be in right now if it didn't have to penny pinch?

Makes me wonder if the deal still stands if the merger falls through...

[Paynefanbro]

Just now, Brad The Beast said:

Makes me wonder if the deal still stands if the merger falls through...

I'm on the same page as you. I'm hoping the answer to that is yes. 

[Brad The Beast]

17 minutes ago, Paynefanbro said:

I'm on the same page as you. I'm hoping the answer to that is yes. 

They did say no more rescues so I wonder. 

[RedSpark]

1 hour ago, Brad The Beast said:

From that article:

Quite an interesting discovery. 

Wow.

So now it’s out that Masa is willing to come up with the money.

This merger is such a sham.

[RedSpark]

https://www.fiercewireless.com/wireless/judge-asks-legere-why-sprint-can-t-do-a-turnaround-like-t-mobile
 

Great question.

[Brad The Beast]

18 minutes ago, RedSpark said:

Wow.

So now it’s out that Masa is willing to come up with the money.

This merger is such a sham.

Masa was willing to pay and had the money to pay. I wonder why he didn't? 

[RedSpark]

1 hour ago, Brad The Beast said:

Masa was willing to pay and had the money to pay. I wonder why he didn't? 

I honestly have no idea. It’s bizarre how he just let Sprint limp along.

[JossMan]

This merger is dead IMO, Son penny pinched just to get what he ultimately wanted.  Sons statement on paying back on bonds is the nail in the coffin.  30% chance this merger is approved 

[Brad The Beast]

10 minutes ago, JossMan said:

This merger is dead IMO, Son penny pinched just to get what he ultimately wanted.  Sons statement on paying back on bonds is the nail in the coffin.  30% chance this merger is approved 

I mean the debt thing was one of the biggest parts of their argument and that's essentially been shot dead. 

[IrwinshereAgain]

11 minutes ago, JossMan said:

This merger is dead IMO, Son penny pinched just to get what he ultimately wanted.  Sons statement on paying back on bonds is the nail in the coffin.  30% chance this merger is approved 

Wouldn't the New TMobile be a stronger competitor to the big 2, then the separate companies? 

[JossMan]

1 minute ago, IrwinshereAgain said:

Wouldn't the New TMobile be a stronger competitor to the big 2, then the separate companies? 

Simple economics here; 3 carriers all happy with their subscriber base, or four carriers two bigger and two smaller that can compete enough to pull subs from the bigger two.  For the last 8 years I've heard Sprint wont be around in the next two to three years yet here we are.  Sprint would need to completely do a 180 with their board with an energetic CEO.  Legere was successful because he appealed to millennials Sprint needs a Legere plain and simple.

[BlueAngel]

Interesting turn of events. 

https://www.foxbusiness.com/media/dish-network-ceo-ergen-to-take-stand-and-defend-t-mobile-sprint-merger

[RedSpark]

15 hours ago, JossMan said:

This merger is dead IMO, Son penny pinched just to get what he ultimately wanted.  Sons statement on paying back on bonds is the nail in the coffin.  30% chance this merger is approved 

It’s defies explanation why Masa let Sprint wither on the vine for so long. Masa effectively devalued his own investment in Sprint to the point where Sprint couldn’t even be the majority partner in the merger he wanted.

Finally the truth comes out: He always had the money to do it. 

For a while, it was claimed that SoftBank's covenants with Japanese banks prevented it from infusing more money into to Sprint: https://www.wsj.com/articles/doubts-grow-about-whether-softbank-can-save-sprint-1439346616

This latest news on Masa’s apparent willingness to pay off Sprint’s debt in whole or in part blows up that narrative completely.

[bigsnake49]

Also from the same article:

Under questioning by the states’ lawyer, Combes said there was a “Plan B” for Sprint in the event the merger with T-Mobile failed to go though. Under that plan, Sprint would focus on fewer markets than it currently does, though its network would still cover about three quarters of the U.S. population.

“Sprint two years from now would be a very different from Sprint today, because we would cease to be a national competitor,” Claure said, adding the company would likely have to borrow money and raise prices.

Read more at: https://www.bloombergquint.com/onweb/sprint-can-survive-without-t-mobile-ex-ceo-claure-testifies
Copyright © BloombergQuint

So be careful what you wish for. Maybe your market will be the one that they pull back from. Maybe they won't be in as many rural and small town markets. Or they have to stop having such liberal roaming policies. They will probably have to sell Boost and close the stores in the markets they abandon. Yeah New York and California will probably still be served. 

Edited December 17, 2019 by bigsnake49

[BlueAngel]

1 minute ago, bigsnake49 said:

Also from the same article:

Under questioning by the states’ lawyer, Combes said there was a “Plan B” for Sprint in the event the merger with T-Mobile failed to go though. Under that plan, Sprint would focus on fewer markets than it currently does, though its network would still cover about three quarters of the U.S. population.

“Sprint two years from now would be a very different from Sprint today, because we would cease to be a national competitor,” Claure said, adding the company would likely have to borrow money and raise prices.

Read more at: https://www.bloombergquint.com/onweb/sprint-can-survive-without-t-mobile-ex-ceo-claure-testifies
Copyright © BloombergQuint

So be careful what you wish for. Maybe your market will be the one that they pull back from. Maybe they won't be in as many rural and small town markets. Or they have to stop having such liberal roaming policies.

This further forces me to go with another carrier if the merger doesn't go through.

[bigsnake49]

11 minutes ago, BlueAngel said:

This further forces me to go with another carrier if the merger doesn't go through.

Yep and that's why this merger is needed. If they have to retrench to only large cities and towns, they will probably concentrate in serving those towns and cities well and abandon the rest. They can probably lease their spectrum in those smaller towns to other providers and get roaming in return. But they will no longer offer service in those little towns.

Edited December 17, 2019 by bigsnake49

[RedSpark]

21 minutes ago, bigsnake49 said:

Also from the same article:

Under questioning by the states’ lawyer, Combes said there was a “Plan B” for Sprint in the event the merger with T-Mobile failed to go though. Under that plan, Sprint would focus on fewer markets than it currently does, though its network would still cover about three quarters of the U.S. population.

“Sprint two years from now would be a very different from Sprint today, because we would cease to be a national competitor,” Claure said, adding the company would likely have to borrow money and raise prices.

Read more at: https://www.bloombergquint.com/onweb/sprint-can-survive-without-t-mobile-ex-ceo-claure-testifies
Copyright © BloombergQuint

So be careful what you wish for. Maybe your market will be the one that they pull back from. Maybe they won't be in as many rural and small town markets. Or they have to stop having such liberal roaming policies. They will probably have to sell Boost and close the stores in the markets they abandon. Yeah New York and California will probably still be served. 

This strikes me as deliberate FUD by Claure.

None of this would be necessary if Masa properly funded and adequately capitalized Sprint from the outset.

But even more so, we know now that that this merger is a total farce, and it should fail because it’s clearly not necessary based on the disclosed communications that Masa was willing to pay off its debt.

Masa: Time to reach for that checkbook.

Edited December 17, 2019 by RedSpark
Updated

[bigsnake49]

33 minutes ago, RedSpark said:

This strikes me as deliberate FUD by Claure.

None of this would be necessary if Masa properly funded and adequately capitalized Sprint from the outset.

This merger is a total farce, and it should fail because it’s clearly not necessary based on the disclosed communications.

Masa: Time to reach for that checkbook.

He could have agreed with John Legere and told the judge that it could lead to bankruptcy. But he did not. Instead he and Coombes said that there is a plan B. Instead of bankruptcy, retrenchment. It totally makes economic sense not just for Sprint but also for T-Mobile. Let the big two and maybe the rural co-ops fight for the rural customers.

Edited December 17, 2019 by bigsnake49

[RedSpark]

1 hour ago, bigsnake49 said:

He could have agreed with John Legere and told the judge that it could lead to bankruptcy. But he did not. Instead he and Coombes said that there is a plan B. Instead of bankruptcy, retrenchment. It totally makes economic sense not just for Sprint but also for T-Mobile. Let the big two and maybe the rural co-ops fight for the rural customers.

Sprint can retrench if it wants to. A merger shouldn’t be granted to keep that from happening, especially given that Masa has always had the means to bail Sprint out on his own. If Masa wants to let Sprint retrench, I’m fine with that. I may have to take my business of 8 lines elsewhere, but so it goes.

If Masa had adequately supported Sprint by offsetting or completely negating its debt, it could have without a doubt been competitive with Verizon/AT&T, even with the comparatively low revenue flow it has versus the big two. Look what it’s been able to accomplish on “fuel vapors”.

Edited December 17, 2019 by RedSpark
Updated

[tommym65]

If . . .  Could have  . . .  Would have . . .  Should have . . .

Sprint, Softbank, and Son could have and should have done many things differently.  If they had, Sprint would have become a different company than it is today.

But they did not do things differently.  So here we are.  Whatever we wish had happened, it did not.

And realistically, there is no practical reason to think that all of these positive things envisioned in this thread will happen if the merger fails.

From the shareholders' point of view, the best thing that could happen today is for Sprint to be absorbed by T-Mobile:  That result will optimize their return-on-investment in the shortest reasonable time.  Otherwise, Sprint will have to spend years trying to recover from its self-made mess, if Softbank will let it recover at all rather than just dumping it. 

And, quite frankly, the fiduciary obligation of Sprint as a corporation is to its shareholders, not to its customers, not to its employees, and not to 1 district and 13 state attorneys general.  So if the merger fails, we should not expect some sort of magical resurgence of Sprint as a viable competitor to the Big 2.  It will not happen, at least in any reasonable time frame.  The shareholders (84% of whom are, in fact, Softbank) will seek some sort of short-term recourse, and we will almost certainly say bye-bye to Sprint as we know it.

[dkyeager]

Softbank would not suddenly wave a magic wand and all debt would disappear.   Sprint would have to be absorbed or recapitialized in some fashion (ie devalue current shareholders), which would require a realistic plan that would have to pass muster.  Then 5G investments could very easily put Sprint back into the poor house.  It all goes back to economies of scale.

It is more likely that Sprint will have greater difficulty getting capital without the merger, since their value in any other merger will decrease, if such a merger is even possible. 

[bigsnake49]

1 hour ago, tommym65 said:

If . . .  Could have  . . .  Would have . . .  Should have . . .

Sprint, Softbank, and Son could have and should have done many things differently.  If they had, Sprint would have become a different company than it is today.

But they did not do things differently.  So here we are.  Whatever we wish had happened, it did not.

And realistically, there is no practical reason to think that all of these positive things envisioned in this thread will happen if the merger fails.

From the shareholders' point of view, the best thing that could happen today is for Sprint to be absorbed by T-Mobile:  That result will optimize their return-on-investment in the shortest reasonable time.  Otherwise, Sprint will have to spend years trying to recover from its self-made mess, if Softbank will let it recover at all rather than just dumping it. 

And, quite frankly, the fiduciary obligation of Sprint as a corporation is to its shareholders, not to its customers, not to its employees, and not to 1 district and 13 state attorneys general.  So if the merger fails, we should not expect some sort of magical resurgence of Sprint as a viable competitor to the Big 2.  It will not happen, at least in any reasonable time frame.  The shareholders (84% of whom are, in fact, Softbank) will seek some sort of short-term recourse, and we will almost certainly say bye-bye to Sprint as we know it.

People don't realize that Sprint and T-Mobile don't owe anybody low prices. Their obligation is to their shareholders. There is no magic formula that says that 3 carriers + MVNOs are going to lead to higher prices or lower prices. Remember that the states did not present any anti-trust evidence (how could they), they just presented evidence that it might need to higher prices.

Edited December 17, 2019 by bigsnake49

[RedSpark]

1 hour ago, dkyeager said:

Softbank would not suddenly wave a magic wand and all debt would disappear.   Sprint would have to be absorbed or recapitialized in some fashion (ie devalue current shareholders), which would require a realistic plan that would have to pass muster.  Then 5G investments could very easily put Sprint back into the poor house.  It all goes back to economies of scale.

It is more likely that Sprint will have greater difficulty getting capital without the merger, since their value in any other merger will decrease, if such a merger is even possible. 

SoftBank can’t just payoff the debt?

[IrwinshereAgain]

2 hours ago, RedSpark said:

SoftBank can’t just payoff the debt?

I think that they would also have to buy the other 15 percent of the stock if they paid off the debt.  That is in the original purchase deal when they first bought. Sprint.