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Once again, effort to merge doesn’t happen for wireless carriers

On Behalf of | Nov 8, 2017 | Business Formation & Planning |

What might have been … .

Those words might logically spell the epitaph for prolonged merger-related negotiations between mobile wireless carriers Sprint and T-Mobile that once again resulted in failure.

The companies first drew back from a merger in 2014, when they reportedly felt threatened by opposition expressed within the Obama administration.

This time the late-inning drawback was apparently all about control.

More specifically, about Sprint executives’ alleged fear that their Japan-based company would have to relinquish too much power to would-be German partner T-Mobile if the companies linked up to better battle larger rivals Verizon and AT&T.

Industry insiders say that the need to shore up resources is obvious for both companies as they confront strong and growing competitive challenges from the above-cited rivals, which are far better positioned to dominate in the future.

The attempted merger was envisioned as the antidote to rivals’ supremacy in the vast and lucrative American market. Reportedly, T-Mobile and SoftBank (the Tokyo-based conglomerate that owns Sprint) were highly motivated to hammer out mutually agreeable merger terms, with executives from both companies strongly believing that a new business combination is needed to survive in the Americas and realistically challenge AT&T and Verizon.

Now Sprint and T-Mobile will have to continue going it alone, as they have always done.

Analysts term that a big problem. A New Times article discussing the failed merger states that a price war among all the carriers that is likely forthcoming “appears unsustainable for the smaller carriers in the long run.”

The future is difficult to predict, of course. It is at least arguable that ever-growing market challenges could once again prompt merger-focused business discussions between T-Mobile and Sprint principals.