Sprint & T-Mobile – Two Bad Companies Don’t Make a Good One

Ever since I worked in Telecom in 2008-2009, insiders had been saying we will see consolidation. We’ve been seeing it (Nextel, etc.). The Wall Street Journal is reporting:

Sprint Nextel Corp. and Deutsche Telekom AG are again discussing options for combining Sprint with the German company’s U.S. subsidiary, T-Mobile USA, though a deal is unlikely in the near term, people familiar with the matter said.

A deal would combine the third and fourth largest wireless carriers by subscribers in the U.S. and create a substantial counterweight to industry leaders AT&T Inc. and Verizon Wireless.

The rule is – two bad companies never make a good one. Sprint and T-Mobile have become irrelevant in the discussion of big mobile carriers.

Verizon is big. AT&T is fast. It could be argued that T-Mobile is cheap – I have friends who keep Android devices on there just because it’s so inexpensive. That’s ok, but they’re not making it up on volume, which would be a necessary condition for a low cost business. Who even knows what Sprint’s strategy is at this point?

What’s even worse is that Sprint can’t seem to learn any lessons:

Sprint late last year finally put an end to revenue declines and subscriber losses in the wake of the company’s disastrous 2005 acquisition of Nextel Communications. Some at the company see no need for Sprint to take on the risk of a T-Mobile acquisition at this point.

March 8, 2011