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Sprint Buying T-Mobile, It’s Just A Rumor

One of the things I love about the :30 second news cycle is how quickly rumors become fact and everyone jumps on the bandwagon.  Those who live in glass houses shouldn’t throw stones so me and are definitely guilty of fueling the rumor fire from time to time as well.

I’ve been trying for three days to figure out a story to put this thought into: It’s a sad day when you can’t even count on Bloomberg or The Wall Street Journal as reliable sources. There, said it.  Today we are talking about the T-Mobile and Sprint merger rumors.  Plain and simple it’s not going to happen, or it’s not going to happen any time soon. If it does happen we will be the first to admit we were wrong but here’s why.

Read why after the break

  • First off, besides being technologically incompatible, Sprint and T-Mobile have been spending millions working on their network infrastructure. Currently two very incompatible network infrastructures.
  • Sprint is struggling with two previous investment/merger strategies that haven’t really paid off. The first of those is of course Nextel. Nextel, which is IDEN, was just about as compatible with Sprint’s CDMA network as T-Mobile’s GSM service is. Although Sprint said prior to the Nextel merger that they were going to keep the IDEN technology and Push to talk growing for the government and business sector, we learned last year that it will be all but extinct by 2013.The next of such ventures was the investment in Clearwire.  Clearwire was bleeding through the gills when Sprint and others, including Time Warner and Google, invested in it. Clearwire was able to hit their rollout plans for 2010 with the influx of cash coming from Sprint’s investment however when Clearwire started hemorrhaging in the latter part of 2010 Sprint took a step back and is still deciding on Clearwire’s rescue.
  • Some of the websites that are billboarding this T-Mobile Sprint merger are using the fact that Sprint CEO, Dan Hesse spoke at the Deutsche Bank AG’s Technology Conference in Florida today. While it is certainly true he did speak at that conference, was Sprint merging with T-Mobile in 2007 when CFO Paul Saleh spoke at the Deutsche Bank Conference in New York?  Deutsche Bank is one of the largest investment banks in the world and CTO’s, CIO’s and CEO’s from all industries regularly speak at their meetings, just as they do with Credit Suisse and Morgan Stanley. On this logic, Perhaps Verizon is considering a purchase of Sprint being that Verizon CTO, Tony Melone, just spoke at the Credit Suisse Conference and Credit Suisse has substantial holdings in Sprint.
  • If Sprint was in a position to move from 3rd place to second or third place with a merger with T-Mobile than it would make more logical sense, however after acquiring T-Mobile, Sprint would still be the third largest carrier in the country.
  • It’s been widely reported that Sprint and T-Mobile can’t agree on a price. T-Mobile was formed in 2001 for $28billion in Deutsche isn’t liking the thought of losing over 10 billion dollars.

In the coming days this rumor will just fade away but at this point it’s just rumor, and really not one that makes much sense.  Will it happen one day? Maybe but remember Bloomberg and the Wall Street Journal said for months and months the iPhone was coming to Verizon, of course it did, but that was much later than their “anonymous sources” stated.

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