& cplSiteName &

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

Sarah Thomas

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
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.
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.

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.

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
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: 

Sarah Thomas
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.
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
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.
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
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.
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
Friday, September 30, 1:00PM EDT
Gigabit & the Great Migration
Robert Howald, Vice President, Network Architecture, Comcast
Wednesday, October 5, 1:00PM EDT
Gigabit & Smart Cities
Joe Kochan, COO & Co-Founder, US Ignite
Friday, October 7, 1:00PM EDT
Gigabit & DOCSIS 3.1
Ty Pearman, Director, Access Architecture, Comcast
Wednesday, October 19, 1:00PM EDT
Securing a Virtual World
Rita Marty, Executive Director, Mobility and Cloud Security, Chief Security Office, AT&T
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
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 Custom TV
Flexible Deployment Approaches for the Gigabit Services Evolution

9|29|16   |     |   (0) comments

For many operators, the gigabit evolution begins with the shift from DOCSIS 3.0 to DOCSIS 3.1. But that move represents a change not only in the protocol itself, but in the approach to architecting their entire DOCSIS delivery chain -- from the headend to the outside plant and home gateway components.

Jonathan Ruff, senior director of global technical ...

LRTV Interviews
Level 3 VP: Enterprises Need More for Less

9|29|16   |   05:27   |   (0) comments

Andrew Dugan, Level 3 group vice president of global technology and IT, says enterprises need more bandwidth and they need it faster and with greater security, but they want to spend less, if possible. They are looking to carriers to reduce their network complexity and help protect them from cyberattacks as well.
LRTV Interviews
CenturyLink: SDN/NFV Pose New Interconnection Possibilities

9|28|16   |   04:37   |   (0) comments

Network operators should develop new APIs and business processes for reselling virtual assets to each other, says CenturyLink's Bill Walker. That will enable them to build digital business portfolios that help them avoid becoming commodity transport providers.
LRTV Interviews
Level 3: Overcoming Terror of Being Supplier, Integrator & Developer

9|28|16   |     |   (0) comments

At Light Reading's NFV & Carrier SDN event in Denver, Travis Ewert of Level 3 Communications said there is terror in becoming supplier, integrator and developer, but it can be overcome and be cost effective.
LRTV Custom TV
Introducing IoT World News

9|27|16   |   01:43   |   (0) comments

Self-driving cars, medical sensors, smart cities... and refrigerators. In order to address the huge scope of IoT, KNect365 has created a unique online community that will help businesses to understand and monetize the opportunities that live within the IoT market. We look forward to welcoming you to IoT World News -- your gateway to a better connected future.
LRTV Interviews
AT&T: Reusable Functions Next NFV Key

9|27|16   |   06:03   |   (0) comments

The next generation of NFV has to break functions down into reusable software chunks, making everything much more cloud-like.
LRTV Interviews
Masergy on Security: Attackers Gaining Upper Hand

9|27|16   |   5:10   |   (2) comments

At Light Reading's NFV & Carrier SDN event in Denver, Ray Watson, vice president of Global Technology at Masergy, says that because of the growth in virtualization, the threat landscape is shifting in favor of the attackers. As a result, service providers need to think beyond just defending the perimeter and take a more holistic approach to security.
LRTV Interviews
Verizon Takes Next Step on Biz Virtualization Journey

9|26|16   |   4:38   |   (2) comments

At September's NFV & Carrier SDN event in Denver, Light Reading sat down with Victoria Lonker, director of Product and New Business Innovation at Verizon, to chat about where the carrier is with delivering virtualized services to business customers.
LRTV Interviews
Global Services: The $40B Face-Off

9|26|16   |   05:53   |   (1) comment

More service providers than ever before are battling it out to win a slice of what is now a $40 billion global communications services pie, explains Ovum Principal Analyst David Molony.
LRTV Documentaries
MEC Congress: The Key Takeaways

9|22|16   |   03:25   |   (3) comments

Three key takeaways from the Mobile Edge Computing (MEC) Congress in Munich, Germany.
Wagner’s Ring
Time to Shut Up About 'Dumb Pipes'

9|22|16   |     |   (20) comments

Service providers can't compete with OTT players. It just isn't in their DNA. Instead, service providers need to embrace what they're good at -- providing reliable, secure connectivity.
Wagner’s Ring
Keeping Your Tech Career Going After 50

9|21|16   |     |   (13) comments

How do you keep your career moving forward when you're past the half-century mark?
Upcoming Live Events
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
Eurobites: Telefónica Taps Juniper for Network Security
Paul Rainford, Assistant Editor, Europe, 9/26/2016
WiCipedia: The Women Helping Women Edition
Eryn Leavens, Special Features & Copy Editor, 9/23/2016
Powell Kills the Cable Show
Mari Silbey, Senior Editor, Cable/Video, 9/29/2016
Telstra Sees Quadrupled Data Capacity by 2020
Carol Wilson, Editor-at-large, 9/28/2016
Open Source Getting on My Nerves
Carol Wilson, Editor-at-large, 9/26/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Animals with Phones
There's Nothing Like Missing a Full Minute of Pokémon Go Click Here
Live Digital Audio

A vital part of increasing the number of women in comms is transforming the ways companies can support and empower women. While progressive company policies that support both men and women in achieving work-life balance are a step in the right direction, creating a company culture that supports those policies can at times be more challenging.

During this show, we'll talk to Lynn Comp, Senior Director of Industry and Sales Enabling (ISE) in the Network Platforms Group at Intel, about why those challenges exist and how companies can overcome them. She'll provide insight into how Intel has worked to create a culture that supports work-life balance, and provide steps and guidance for other companies wishing to do the same. We will also leave plenty of time to get your questions answered live on the air.