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What Happens to Sprint After AT&T/T-Mobile Merger?

AT&T Inc. (NYSE: T)'s plans to acquire T-Mobile US Inc. could make Sprint Corp. (NYSE: S) an attractive candidate for Verizon Wireless to snatch up. If the deal passes regulatory approvals in the U.S., being acquired by Verizon may be the only option for the nation's third-largest carrier to compete in such a consolidated environment. (See AT&T to Buy T-Mobile USA for $39B.)

Prior to Sunday's announcement, rumors had long been swirling that Sprint and T-Mobile were working on a merger, which now appears to be off the table given AT&T's purchase. In fact, part of AT&T's motivation in buying T-Mobile may have been to block Sprint from making the deal happen instead. (See A DT Bid for Sprint?)

By snatching up T-Mobile, AT&T is putting Sprint in a decidedly precarious position. It will be smaller in both subscriber numbers and spectrum if the deal passes. It will also become the only Tier 1 U.S. carrier without the iPhone.

A Verizon-and-Sprint merger may make more sense than a T-Mobile/Sprint tie-up anyway since they operate compatible CDMA networks. Sprint is also reportedly mulling a switch from WiMax to Long Term Evolution (LTE), so a Verizon acquisition would enable both to compete against AT&T's own LTE network plans. Verizon has already launched 30-plus LTE markets in the U.S.; AT&T is expected to start commercial LTE service later this year.

If the deal does not close, Sprint may still have a shot at merging with T-Mobile -- however, it now knows the bar is set at $39 billion.

For Verizon, which will likely seek a competitive response, smaller CDMA U.S. carriers MetroPCS Inc. (NYSE: PCS), U.S. Cellular Corp. (NYSE: USM) or Leap Wireless International Inc. (Nasdaq: LEAP) could also be on the table.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

sarahthomas1011 12/5/2012 | 5:09:57 PM
re: What Happens to Sprint After AT&T/T-Mobile Merger?

Sprint has issued a statement basically agreeing that it'd be in big trouble if this happened. AllThingsD covered it here: http://mobilized.allthingsd.com/20110320/sprint-atts-t-mobile-buy-would-dramatically-alter-market/

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