& cplSiteName &

DT Asks for $1B Prenup for Sprint, T-Mobile — WSJ

Sarah Thomas
5/12/2014
50%
50%

T-Mobile ended up with a nice pile of $3 billion when AT&T wasn't permitted to acquire it in 2011. Now, Deutsche Telekom, which owns 67% of the "uncarrier," is hoping for similar compensation if a deal with Sprint doesn't go through.

The Wall Street Journal reported over the weekend that Deutsche Telekom AG (NYSE: DT) is asking for more than $1 billion if Sprint Corp. (NYSE: S) fails to acquire its US subsidiary T-Mobile US Inc. , as well as promises to preserve T-Mobile's brand and parts of its management team. (See Report: SoftBank Preps $19B Bid for T-Mobile.)

The situation is similar to when AT&T Inc. (NYSE: T) attempted to acquire T-Mobile. The cash and spectrum that T-Mobile earned when it failed to get approval enabled it to expedite its LTE rollout and make its big "uncarrier" push, targeting its almost-parent company most fiercely. If Deutsche Telekom's demands are agreed to, it will put it in a similar win-win situation whether the deal goes through or not. (See T-Mobile Gets Spectrum in AT&T Breakup.)

This is, of course, all still conjecture. The Sprint and T-Mobile tie-up has to be one of the most hinted at and discussed-without-discussing deals in recent telecom history. Sprint has yet to make a formal offer for its small but growing competitor, although sources have said that will happen sometime this summer. (See T-Mobile Sacrifices Costs for Customers.)

The WSJ, however, is now suggesting the carriers could wait until 2015 until after the government's spectrum auctions, or until a new administration to attempt to merge. Right now, the carriers don't have a favorable environment for approval as regulators have said they are skeptical of the merger and will view it with scrutiny.

For its part, Sprint really can't afford to lose any more cash or assets to T-Mobile if the deal weren't to go through. It's likely weighing the question of whether it can survive another few years without T-Mobile if it does decide to revisit the merger in the future instead, or push through, at the risk of being denied, right now. (See Son: Dish Could Be Sprint's Great Ally.)

— Sarah Reedy, Senior Editor, Light Reading

(10)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
5/13/2014 | 12:37:33 PM
Re: Rock and a Hard Place for Sprint
That is the alternative, Desi, and it might not be a bad one if Sprint can get its act together. About the time Sprint completes Network Vision and stops losing customers who churned because of it could be the time all the money T-Mobile has spent trying to gain new customers starts to really hurt it. The industry is always in flux and fortunes could change.
DHagar
50%
50%
DHagar,
User Rank: Light Sabre
5/13/2014 | 12:32:23 PM
Re: Rock and a Hard Place for Sprint
@desi, good strategy!  I agree, they either need to pass up the opportunity, with strategic reasons, not just letting the train go by, or get on board and fully compete.  But, as you point out, they need to define where they want to go.

 
desiEngineer
50%
50%
desiEngineer,
User Rank: Light Beer
5/13/2014 | 10:35:28 AM
Re: Rock and a Hard Place for Sprint
Alternatively, Sprint says no deal, executes on its Spark, small cell, MVNO, etc. projects, and stays #3, but puts some distance between itself and TMo (which is what is hurting Sprint the most right now), and ignores the virtualization fad as it stanches the bleeding.  DT gets fed up of being 4th and not moving up, and gets off its opportunistic high horse.  You can only lose money buying customers for so long.

Not that this is an easy merger - Sprint needs better LTE coverage sooner in order to pull this off (both pre and post merger) because running both a legacy CDMA and a GSM/UMTS network is a high price.

On the other hand, being #3 (as the combo would be) is still a great place to be, all the growth with none of the quality expectations.

-desi
DHagar
50%
50%
DHagar,
User Rank: Light Sabre
5/12/2014 | 6:28:01 PM
Re: Rock and a Hard Place for Sprint
@Sarah, interesting poker game! 

T-Mobile is definitely in the winning position, which is why Sprint is going to have to make a bold move and leverage its bets.  Absolutely, the upcoming auctions and regulatory winds will affect them.  It appears the only way they will strengthen their position now is to align T-Mobile on one side or the other of the way they are going to play the game.  Then ante up and go for it, if they move forward on acqusition - including the Pre-nup. 

They are going to have to pull the rabbit out of the hat and go for it.  They might just win!
Bill Van
100%
0%
Bill Van,
User Rank: Moderator
5/12/2014 | 5:56:03 PM
Re: Rock and a hard place for Sprint
Softbank owns 37% of Alibaba which the IPO is valued at approximately $190B. Softbank's $200 million investment now worth approximatel $70 Billion, not bad.  Softbank seem to have plenty of resourses to pump billions in to Sprint when needed. Bloomberg's recent article: 

http://www.bloomberg.com/news/2013-11-06/softbank-plans-to-keep-alibaba-stake-as-public-listing-looms.html
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
5/12/2014 | 3:34:11 PM
Re: Rock and a hard place for Sprint
T-Mobile is already stealing a lot of Sprint's customers as of the first quarter, and it's struggling to maintain those it has left as it works through Network Vision. But, I really said that because that is what Son has been suggesting as he tries to convince everyone the merger is necessary. If it's true, then it needs to move now, but now might not be the best time given the auctions and regulatory environment. It's a win-win for T-Mobile, but definitely not for SPrint.
milan03
50%
50%
milan03,
User Rank: Light Sabre
5/12/2014 | 3:21:42 PM
Re: Rock and a hard place for Sprint
May I ask why wouldn't Sprint be able to compete without T-Mobile? 

They have massive potential with spectrum and Masa's cash. They have been setup for success already. It's their management that's completely incompetent that should've been replaced years ago.

Picking up T-Mobile isn't going to bring much good to US consumers, it'll most likely slow down or halt T-Mobile's resurgence, and ensure that Sprint's NewCo won't have access to that allocated 30MHz of spectrum going into TV Incentive auction in 2015. Also, they will most likely have to divest that massive spectrum if the merger goes trhough... It's a terrible, terrible proposition.
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
5/12/2014 | 1:50:56 PM
Re: Rock and a hard place for Sprint
Maybe that was its strategy all along. At the least, it doesn't stand to lose either way, just Sprint does.
bosco_pcs
50%
50%
bosco_pcs,
User Rank: Light Sabre
5/12/2014 | 1:37:12 PM
Re: Rock and a hard place for Sprint
T-Mobile can make more money whenever a suitor got chased off by DOJ, not that there are too many more suitors left
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
5/12/2014 | 12:58:13 PM
Rock and a hard place for Sprint
This is a tough spot for Sprint to be in. It may not be able to compete much longer without a T-Mobile merger (potentially), but there's a good chance it doesn't go through, in which case T-Mobile would be able to crush it in the market with the cash on hand. Really not sure if it makes sense for it to wait on this one or try its luck.
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
MWC17: 5G, Cloud RAN & More

2|21|17   |   04:35   |   (0) comments


Ovum Senior Analyst Julian Bright talks to Scott Bicheno from Telecoms.com about all things MWC, including Cloud RAN, Huawei's pitch to the industry and the road to 5G.
LRTV Interviews
MWC 2017's Key 2-Letter Terms

2|20|17   |   08:29   |   (1) comment


5G, AI, VR... these are just some of the two-letter terms that will dominate show-floor chat at MWC 2017 in Barcelona, according to these two blow-hards (a.k.a. Scott Bicheno of Telecoms.com and Light Reading's Ray Le Maistre). And then there's PB...
LRTV Interviews
Key Trends for Mobile Operators in Developing Markets

2|20|17   |   06:37   |   (0) comments


Ovum's Matthew Reed talks to Scott Bicheno from Telecoms.com about the challenges and opportunities facing mobile operators in the developing markets of Africa and the Middle East.
LRTV Documentaries
YouTube Takes on Facebook Live-Streaming

2|17|17   |     |   (0) comments


Popular 'YouTubers' will be the first to get the new service on their smartphones. You have been warned.
LRTV Custom TV
Open Source NFV/SDN Automation

2|17|17   |   05:54   |   (0) comments


AT&T ECOMP (Enhanced Control, Orchestration, Management and Policy) code is transitioning into the Linux Foundation for placement into open source. In this video, Carol Wilson provides an update on the maturation of open source ECOMP and meets with industry leaders from AT&T, Bell Canada, Orange, Linux Foundation and Amdocs to discuss what this means for the ...
LRTV Documentaries
Uber & NASA Collaborate on Flying Car Project

2|16|17   |     |   (0) comments


Is Uber for real? Well, it's hired NASA engineer Mark Moore to lead the project, and he wouldn't come cheap.
LRTV Documentaries
Zuckerberg Tries Out the Oculus Rift VR Glove

2|15|17   |     |   (0) comments


Facebook CEO shows off a new way to interact with the Oculus Rift virtual reality headset: an Oculus glove.
LRTV Custom TV
Huawei Digital Transformation Forum 2017

2|10|17   |     |   (0) comments


Here's a preview of the upcoming Huawei Digital Transformation Forum taking place in Barcelona with trending telecom topics like cloud, IoT, 5G and much more!
Telecom Innovators Video Showcase
Dan Sahar of Qwilt on Open Edge Cloud Platform

2|8|17   |   08:38   |   (0) comments


Dan Sahar, Qwilt's co-founder, sits down with Steve Saunders of Light Reading for a conversation about Qwilt's Open Edge Cloud platform and the new role of service providers in application and content delivery.
LRTV Documentaries
ZeroStack's 'Self-Driving Cloud'

2|7|17   |   01:09   |   (0) comments


Its Z-Brain tech automates day-to-day management and long-term planning for hybrid clouds.
Telecom Innovators Video Showcase
Nominum's Craig Sprosts on DNS & Cybersecurity Trends

2|7|17   |     |   (0) comments


Nominum's Craig Sprosts talks about the fast-changing landscape of cybersecurity with Steve Saunders of Light Reading. Sprosts touches on the trend of the rise of ransomwares, rivals of IoT base attacks, and mobile network security. He also discusses the realization of the importance of IoT security after a recent cyber attack that paralyzed several major ...
LRTV Documentaries
China Moves Towards Mixed Ownership of Telcos

2|1|17   |   01:10   |   (0) comments


Chinese authorities are promoting new ownership models in order to raise capital.
Upcoming Live Events
March 21-22, 2017, The Curtis Hotel, Denver, CO
March 22, 2017, The Curtis Hotel, Denver, CO
March 22, 2017, The Curtis Hotel, Denver, CO
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Is the Time Right for a Cisco/Ericsson Wedding?
Ray Le Maistre, Editor-in-chief, 2/17/2017
Broadband Has a Problem on the Pole
Mari Silbey, Senior Editor, Cable/Video, 2/21/2017
Nice to See at Least One CSP Taking My Advice
Mitch Wagner, Editor, Enterprise Cloud, 2/17/2017
Charter Launches 5G Field Trials
Mari Silbey, Senior Editor, Cable/Video, 2/16/2017
RSAC 2017 in 4 Words
Curtis Franklin, Security Editor, 2/17/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading founder and CEO Steve Saunders chats with Sportlogiq CEO Craig Buntin about sports data analysis.
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Animals with Phones
No One Likes This Click Here
Take a hint!
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.