Feature Article

March 09, 2011

Huddled Masses: Clearwire, Sprint and T-Mobile

Rumors are flying about the merger talks between Sprint and T-Mobile. I am not a reporter, but more of a historian, and for that reason, I have problems reacting to the news. Reality is that mergers and acquisitions at this level take very motivated people to shepherd them through. I know some of the people who make these deals and they are adept at managing motivations, both human and corporate. Let’s talk about the motivations for having the discussion. 

A key thing to remember is there are a lot of other stakeholders involved.

Clearwire: The WiMAX window has come and gone. Initial investors, such as Intel, are now actively supporting LTE, and Google has succeeded in competing with Apple with Android. So the two primary drivers that wanted to see an alternative P- based wireless standard are less motivated. While the company can still find a niche in the marketplace, the retail/wholesale insanity has to be resolved. However, regardless of the network, the spectrum is the best asset of any player and is a card that for the time being cannot be overplayed.

You may remember the strange experience of Clearwire asking Sprint, the 54 percent owner of Clearwire, to leave the room so Clearwire could talk to T-Mobile.

Sprint: Ah Sprint. What can I say about Sprint? Sprint has had a rough time making money. Its losses continue and its acquisitions are often brands that have not succeeded at breaking out, but have made enough noise to warrant keeping them. Boost, Nextel, Virgin Mobile all still exist with a base that adds to the bottom line but represents a dream of segmentation in retail and a nightmare of management in the network. The Clearwire move to me was brilliant on its part because it migrated a build out away from the day-to-day and gave a focus on a strategy for its 4G future. However, the dreams are all stalled because as my pal Richard Shockey says, “Money is the answer, now what was the question.”

T-Mobile: Is not just not another pretty face, although their new ads use a young lady (who looks sort of like Anne Hathaway) and have replaced Catherine Zeta- Jones (who replaced Jamie Lee Curtis). It’s a clever ad campaign. However the T-Mobile ad campaigns have always been less substantive than I would like, and I have written in the past about ways I would change the marketing of the one company that enabled easy worldwide roaming. For DT, the offer on the table for T-Mobile values their investments in the U.S. at about 60 percent of what they paid in 2001. Twenty-five percent of T-Mobile customers are smartphone users; but the net gains have been minor even though they were first movers to Android with their HTC and Motorola solutions.

Of all the networks involved, T-Mobile has the best technology path with the migration path of HSPDA.

Behind the scenes we have a lot of other wildcards. Comcast (and the other seven cable dwarfs), Lightsquared and Microsoft all have reasons to chime in on the possibilities of mergers.

Here is the most interesting motivation. All three companies have relatively new CEOs. CEOs rarely want to be known for managing what they were given. They want to be known for what they brought to the table. This is probably the biggest reason why they are at the table. Let’s see if they can emerge from the huddle mass with a story that makes sense. 

Carl Ford is a partner at Crossfire Media.

Edited by Tammy Wolf

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