Knee-Jerk Reaction On Sprint’s Future After AT&T and T-Mobile Announcement

In case you haven’t heard, AT&T has announced they will buy T-Mobile from Deutsche Telekom for $39 billion. This deal would make AT&T the largest wireless carrier in the United States.

Reaction to the news has been nuts already. Sprint’s stock (ticker symbol: S) is getting hammered in the stock market with a 13% drop (as of this writing) amidst very heavy volume. Speculations galore as to what will happen next to Sprint, Verizon, AT&T, the state of wireless in the U.S., and so forth. Even though I SHOULD be working on some other projects right now, I couldn’t sit by idly as everyone prophecizes Sprint’s demise. Here are a few knee-jerk thoughts to this news.

  • Will the buyout happen? – First, and most importantly, we have to question if this buyout will be allowed to move forward with regulators. That’s a mighty big merger there and getting fairly close to anti-competitive in the market place.
  • When will it happen? – Even if this buyout is allowed, we’re talking probably a year or so of regulators scrutinizing the living hell out of this deal, its effect on the market place, how it affects consumers, and so forth. It may have been announced, but it certainly isn’t going to be completed by Father’s Day.
  • Will Verizon Buy Sprint Next? – If the AT&T deal is allowed, I still highly doubt a duopoly would be allowed with Verizon buying Sprint. It would be interesting with both GSM (AT& T and T-Mobile) and CDMA (Verizon and Sprint) merging to having just one player in each technology but I really don’t see regulators going for this.
  • Competition for Sprint – This one is a toughie. On one hand, it would leave Sprint as the number three carrier behind AT&T and Verizon. On the other hand, it means one less competitor for Sprint to have to deal with. It’s easier to focus your energy on battling two giants than it is two giants and a small player.
  • Sprint’s Recent Business – Sprint has turned itself around since bringing on Dan Hesse. Customer defections are down, subscriptions are up, money is flowing in the right direction, customer service has turned around completely. Sprint will continue this trend.
  • Sprint Has More Than Cell Phones – Sprint is more than just a company that sells cell phones to customers. They have put loads of energy into growing their M2M (machine to machine) business that brings in revenue without having to deal with customers coming and going on the whim of a new shiny cell phone. Most M2M is used for LBS (location based services) which in itself is a rapidly growing industry. Sprint was smart to prepare for this M2M growth and capitalize on it.

The web is abuzz with this news. I personally think it’s great for Sprint as it lets them focus on less competition and to continue their path that has already been digging them out of the trenches. The knee-jerk market reaction of killing the stock has not gone un-noticed by me (disclaimer: I snagged a few shares today on the news) and I find it quite comical.

CTIA starts tomorrow and there have already been leaks of some awesome new phones that Sprint will have (HTC Evo 3D and Nexus S 4G to name a couple). Let the marketplace go into a frenzy on this news and let them focus on a deal that may or may not happen and watch Sprint carry on with their turn-around plan and bank on everyone’s perception that Sprint will wither on the vine.

I apologize in advance for the brevity and hastiness but that’s what you get with a knee-jerk reaction. Live it…love it.