A ZDNet article highlighted the any obstacles Sprint could encounter in its bid for T-Mobile. Citing a Wall Street Journal report, the article said a regulatory review that will be conducted by Sprint in lieu of its planned $20 billion acquisition offer T-Mobile is a red flag already.
One perhaps an all-too important reason that a Sprint-T-Mobile could not happen is because of competition. Should a merger between Sprint and T-Mobile would happen, the US will have three major carriers dominating the telecommunications space, which are Verizon, AT&T and Sprint, according to the report. The report also noted that Sprint was acquired by Softbank Corp, while T-Mobile had acquired MetroPCS. Two years ago, AT&T was close to putting up an acquisition offer for T-Mobile. The report said the regulators' consternation in the US is that four major carriers are better for competition, and any less than that could just up the ante.
Aside from competition, the report pointed out Sprint's capability to handle integration of its networks to that of T-Mobile should both consolidate in the near future. Behind its network, Sprint currently has CDMA, WiMax and LTE technology, while T-Mobile has GSM, LTE and HSPA/HSPA+. The report said the technologies used by each company could provide a big headache to its customers in the long run should it decide to merge, as it will count years to make sense of each network integration. Moreover, T-Mobile and Sprint have massive prepaid subscriber bases, which will not spell excellent profit margins for the future consolidated firm, said the report, as prepaid cuistomers are the least creditworthy and least lucrative.
Also, the report questioned Sprint's intention to acquire T-Mobile, as the latter is not known for its excellent network coverage. Despite fixing its customer service issues, Sprint is still paying the price for certain decisions that has caused it to decline as a company years ago. Although both are going at the right direction, the report said the merger of Sprint and T-Mobile does not mean that it will be a powerhouse brand in the telecommunications industry.
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