Light Reading
The WSJ reports that Deutsche Telekom is asking for $1 billion in break-up cash from Sprint if it's unable to acquire T-Mobile.

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

Sarah Reedy
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
SarahReedy
50%
50%
SarahReedy,
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: Lightning
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
SarahReedy
50%
50%
SarahReedy,
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.
SarahReedy
50%
50%
SarahReedy,
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 Beer
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
SarahReedy
50%
50%
SarahReedy,
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.
Educational Resources
sponsor supplied content
Educational Resources Archive
Flash Poll
LRTV Custom TV
A New Security Paradigm in SDN/NFV

7|28|14   |   02:54   |   (0) comments


Paul Shaneck, Global Director Network Solutions for Symantec, discusses the evolving virtualized network, explaining how Symantec is leading the security discussion as it relates to SDN and NFV, and helping to ensure the network is protected and compliant.
LRTV Documentaries
Sprint's Network Evolution

7|24|14   |   14:59   |   (0) comments


Sprint's Jay Bluhm gives a keynote speech at the Big Telecom Event (BTE) about Sprint's network and services evolution strategy, including Spark.
LRTV Documentaries
BTE Keynote: The Software-Defined Operator

7|24|14   |   18:43   |   (1) comment


Deutsche Telekom's Axel Clauberg explains the concept of the software-defined operator to the Big Telecom Event (BTE) crowd.
Light Reedy
Numbers Are In: LR's 2014 Salary Survey

7|24|14   |   1:25   |   (7) comments


Our fourth annual Salary Survey paints a picture of who's hiring, firing, earning, and yearning for a change in the telecom industry.
LRTV Custom TV
Driving the Network Transformation

7|23|14   |   4:29   |   (0) comments


Intel's Sandra Rivera discusses network transformation and how Intel technologies, programs, and standards body efforts have helped the industry migration to SDN and NFV.
LRTV Custom TV
Distributed NFV-Based Business Services by RAD

7|18|14   |   5:38   |   (0) comments


With the ETSI-approved Distributed NFV PoC running in the background, RAD's CEO, Dror Bin, talks about why D-NFV makes compelling sense for service providers, and about the dollars and cents RAD is putting behind D-NFV.
LRTV Custom TV
MRV – Accelerating Packet Optical Convergence

7|15|14   |   6:06   |   (0) comments


Giving you network insight to make your network smarter.
LRTV Custom TV
NFV-Enabled Ethernet for Generating New Revenues

7|15|14   |   5:49   |   (0) comments


Cyan's Planet Orchestrate allows service providers and their end-customers to activate software-based capabilities such as firewalls and encryption on top of existing Ethernet services in just minutes.
LRTV Custom TV
Symkloud NVF-Ready Video Transcoding, Big Data

7|9|14   |   3:41   |   (0) comments


Kontron and ISV partner Vantrix demonstrate high-performance video transcoding and data analytic solutions on same 2U standard platform that is ready for SDN and NFV deployments made by mobile, cable and cloud operators.
LRTV Huawei Video Resource Center
The Evolving Role of Hybrid Video for Competitive Success

7|4|14   |   4:09   |   (0) comments


At Huawei's Global Analysts Summit in Shenzhen, China, Steven C. Hawley from TV Strategies speaks to us about the evolving role of hybrid video for competitive success.
LRTV Huawei Video Resource Center
How CSPs Leverage Big Data in the Digital Economy

7|4|14   |   4:48   |   (2) comments


Justin van der Lande from Analysys Mason shares with us his views on how telecom operators can leverage customer asset monetization with big data. His discusses the current status of big data applications and the challenges and opportunities for telecom operators in the digital economy era.
LRTV Huawei Video Resource Center
Accelerator for Digital Business – Future Oriented BSS

7|4|14   |   3:08   |   (0) comments


Mobile and internet are becoming intertwined; IT and CT are integrating; and leading CSPs have begun to transform to information service and entertainment providers. How should the BSS system evolve to enable this transformation? Karl Whitelock, an analyst at Frost & Sullivan, shares his views.
Upcoming Live Events!!
September 16, 2014, Santa Clara, CA
September 16, 2014, Santa Clara, CA
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 9-10, 2014, Reykjavik, Iceland
Infographics
Packet Design asks network professionals how they handle the cloud, SDN, and network management.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
Facebook: 30% of Users Are Mobile-Only
Mitch Wagner, West Coast Bureau Chief, Light Reading, 7/24/2014
Is Windstream Boldly Setting a New Trend?
Carol Wilson, Editor-at-large, 7/29/2014
Nokia Holds Steady in Q2, Raises Outlook
Ray Le Maistre, Editor-in-chief, 7/24/2014
U-verse Growth Slips But Still Strong
Alan Breznick, Cable/Video Practice Leader, 7/24/2014
Verizon Applies 3G Throttling Policy to LTE
Sarah Reedy, Senior Editor, 7/25/2014
Like Us on Facebook
Twitter Feed