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Posted by on Oct 30, 2017 in Business tech, Tech Trending | 0 comments

What’s Next for Sprint and T-Mobile After Collapsed Merger Talks?

What’s Next for Sprint and T-Mobile After Collapsed Merger Talks?

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The on-again-off-again courtship between Sprint and T-Mobile appears to be off again.

Monday, multiple publications reported that Sprint and T-Mobile have been unable to reach a merger agreement. The dispute reportedly revolves around whether Sprint’s parent company SoftBank or T-Mobile parent company Deutsche Telekom would own a controlling share in the merged company. According to Japanese financial newspaper Nikkei, the first to report the rumor, SoftBank is unwilling to accept a non-controlling share and will walk away from the deal as soon as Tuesday.

This isn’t the first time a potential marriage between the two companies has fallen through. In 2014, T-Mobile and Sprint called off previous merger talks after it became clear that regulators would block the deal. The latest round of negotiations followed the election of President Donald Trump and the appointment of the more telco-friendly Federal Communications Commissions Chair Ajit Pai.

While the “will they or won’t they” question is apparently settled for now, another question looms: What will happen to each company on its own?

There are other potential suitors for the two companies, including satellite television company Dish and cable giants Comcast and Charter.

Dish, which flirted with merging with T-Mobile back in 2015, has long promised to build its own mobile network. Dish controls ample spectrum, and acquired additional rights earlier this year. Buying Sprint or T-Mobile would make it easier to break into the market. “Dish is the most interesting suitor, because it has spectrum and needs to build on it,” says GlobalData analyst Avi Greengart. “However, spectrum isn’t the core problem that T-Mobile or Sprint face—both have existing swaths of spectrum that they are still building out themselves.”

Comcast launched its own mobile-phone service earlier this year, relying on Verizon’s network. The company sold its wireless spectrum rights to Verizon in 2011. If Comcast executives believe the initiative to be a success, Greengart says, that could justify further investment by acquiring a wireless network. Earlier this year, Comcast and Charter announced an agreement not to acquire any wireless companies without each other’s permission, which fueled speculation that the two companies might try to jointly acquire Sprint or T-Mobile.

T-Mobile might opt to stay single. Since 2014, T-Mobile has leapt over Sprint to become the third-largest carrier in the US, reached profitability, and continued to add new subscribers every quarter. The company also acquired rights to a significant chunk of the 600MHz wireless spectrum earlier this year, which could eventually help it compete against Verizon in rural areas.

“The challenging thing here is that T-Mobile is in much better shape to keep going on its own than Sprint, but Sprint is also a far less attractive acquisition target than T-Mobile because of its inferior network and performance,” he says. “So Sprint needs a buyer more than T-Mobile, but is less likely to find one.”

The market apparently agrees. Sprint shares fell 9.3 percent Monday, while T-Mobile fell 5.4 percent.

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