There has been much speculation over the last couple of weeks about T-Mobile making a bid to buy out Sprint...especially after the news that combined, they lost over 500,000 customers in the last quarter.
The common wisdom has been that this would not be a good move for either company, primarily because of the fact that these two companies are on 1) two completely different technology platforms and more importantly 2) there technology roadmaps are divergent.
Call it a slow news week (I won't comment on "Bada Bing"), but this is something that I have actually been thinking about for some time. What if I played The Devil's Advocate and said it was reasonable and plausible? (how's that for a legal term)
So let me say again, at face value this makes no sense. Sprint is CDMA today and WiMAX tomorrow (generally speaking), while T-Mobile is GSM today and LTE tomorrow. Deal breaker - right? Well, Sprint (for better or for worse) bought an incompatible technology in Nextel a few years back, so there is precedent. But there are two places where things get interesting.
- Both AT&T and Verizon Wireless each has about 80 million customers. What would happen if Sprint and T-Mobile were to merge? You guessed it, they would also have about 80 million customers. Maybe this is why you should believe in numerology. So if there are now three nationwide companies that each have pretty even share of the market, I will argue that this will NOT be a hinderance to competition. In fact, I would argue it would fuel it. An even playing field means that no one is a leader. To lead, the "three" major players will have to then innovate their offerings in order to get their unfair share of market.
- The WiMAX and LTE debate. I'll argue it's almost a moot point. Why? Listen to the original Clearwire conference call where the senior management said that they could actually pretty "easily" make a switch to LTE if the market required it. So if T-Mobile is going to LTE (which you know they will), what's the matter in running two networks for some time, while consolidating back ends, getting better operational efficiencies and working on a converged network?
Let's consider one more thing. T-Mobile is known for great consumer plans and even better customer service. I was a T-Mobile customer for 10 years and almost always received superior service. However, T-Mobile is not known for its enterprise mobility chops. On the other hand, SprintNextel has a legacy (especially from the Nextel side) of having leading enterprise mobility offerings...however, their customer service quality has, on more than one occasion, been called into question.
So what if I argued that these two companies were phenomenally complementary? One company has great customer service, the other has great enterprise mobility chops, and both offer compelling consumer plans.
Now let's be clear, I am not confused. The merger of these two organizations would have to pass several regulatory hurdles and then would be nothing short of a Herculean challenge, but maybe, just maybe, it could work...
